This analysis was instigated by an article in the News Column on the front page:
EURGBP - Correcting Lower then Much Higher by DailyFX, March 9 13:55
The daily chart for EUR/GBP shows 5 waves up from the 1/23 low at .6536. The 5 waves up compose a larger 1st wave and indicate that the longer term trend is now up. We...
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Article:
EURGBP - Correcting Lower then Much Higher
Analysis by DailyFX
Current Price: .6787
http://www.dailyfx.com/export/sites/...-07weekly2.gif
The daily chart for EUR/GBP shows a clear 5 waves up from the 1/23 low at .6536. The 5 waves up compose a larger 1st wave and indicate that the longer term trend is now up. We expect a correction to test fibo support (.6690-.6727). .6690 is also the previous 4th wave extreme. A decline to this level will be the larger 2nd wave. A strong 3rd wave rally is expected following a correction to the cited levels.
The weekly chart shows the long term triangle and double bottom just above .6500. The pair should work up to test triangle resistance. Given the clear 5 wave rally from the low, we are ultimately looking for the EUR/GBP to take out the May 2003 high at .7257. We noticed this triangle and double bottom previously at http://www.dailyfx.com/story/chartin...827839628.html
This is a close up view of the 5 wave advance from .6536. As mentioned, a 3 wave correction should unfold and take price close to .6690 before another 5 wave advance occurs (which will be wave 3). Wave 3s are often powerful. If wave 2 ends at or close to .6690, then the 161.8% extension of wave 1 would be the bullish target at .7193.
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Analysis by Itme:
One more upwards wave is possible before the correction
The fifth wave up for EUR/GBP may not be finished. We may have just completed the fourth wave, which is an A-B-C downwards corrective wave. We may see one more upwards push to about .6850 - .6875 before the uptrend is over. The close today is .6787.
GBP/USD could continue with its current downtrend to about 1.9000 - 1.9100. This will probably cause EUR/GBP to rise strongly.
One possible solution to the system of wave equations is a decline of GBP/USD to 1.9000, a decline of EUR/USD to 1.3060, and a rise of EUR/GBP to .6875.
The current price of GBP/USD is 1.9322, and the current price of EUR/USD is 1.3113 going into the weekend.
EUR/USD is well supported in my system at 1.3060, which is the 50% retracement of the January 26 to February 28 - 383 pip uptrend. There is also a 40 day supporting trendline (and a 16 day supporting trendline also) that should both intersect the EUR/USD downtrend at about 1.3060 in a couple of days. EUR/USD is now in a Wave 4 upwards correction and consolidation pattern that should keep it range bound for a few days and could take the price up to about 1.3130 to 1.3140 before the predicted decline to 1.3060.
Presented trading opportunities.
If our hypothesis turns out to be correct, then the trading opportunities will consist of:
1) shorting EUR/USD at 1.3130 to 1.3140 (depending on the elaborated wave pattern), with a target at 1.3060.
2) shorting GBP/USD at 1.9400 to 1.9500 (depending on the elaborated wave pattern),with a target at 1.9000 to 1.9100.
3) shorting EUR/GBP at about .6850 - .6875. The target would be at about .6700 to .6750.
EURGBP - Correcting Lower then Much Higher by DailyFX, March 9 13:55
The daily chart for EUR/GBP shows 5 waves up from the 1/23 low at .6536. The 5 waves up compose a larger 1st wave and indicate that the longer term trend is now up. We...
_____________________________________________
Article:
EURGBP - Correcting Lower then Much Higher
Analysis by DailyFX
Current Price: .6787
http://www.dailyfx.com/export/sites/...-07weekly2.gif
The daily chart for EUR/GBP shows a clear 5 waves up from the 1/23 low at .6536. The 5 waves up compose a larger 1st wave and indicate that the longer term trend is now up. We expect a correction to test fibo support (.6690-.6727). .6690 is also the previous 4th wave extreme. A decline to this level will be the larger 2nd wave. A strong 3rd wave rally is expected following a correction to the cited levels.
The weekly chart shows the long term triangle and double bottom just above .6500. The pair should work up to test triangle resistance. Given the clear 5 wave rally from the low, we are ultimately looking for the EUR/GBP to take out the May 2003 high at .7257. We noticed this triangle and double bottom previously at http://www.dailyfx.com/story/chartin...827839628.html
This is a close up view of the 5 wave advance from .6536. As mentioned, a 3 wave correction should unfold and take price close to .6690 before another 5 wave advance occurs (which will be wave 3). Wave 3s are often powerful. If wave 2 ends at or close to .6690, then the 161.8% extension of wave 1 would be the bullish target at .7193.
__________________
Analysis by Itme:
One more upwards wave is possible before the correction
The fifth wave up for EUR/GBP may not be finished. We may have just completed the fourth wave, which is an A-B-C downwards corrective wave. We may see one more upwards push to about .6850 - .6875 before the uptrend is over. The close today is .6787.
GBP/USD could continue with its current downtrend to about 1.9000 - 1.9100. This will probably cause EUR/GBP to rise strongly.
One possible solution to the system of wave equations is a decline of GBP/USD to 1.9000, a decline of EUR/USD to 1.3060, and a rise of EUR/GBP to .6875.
The current price of GBP/USD is 1.9322, and the current price of EUR/USD is 1.3113 going into the weekend.
EUR/USD is well supported in my system at 1.3060, which is the 50% retracement of the January 26 to February 28 - 383 pip uptrend. There is also a 40 day supporting trendline (and a 16 day supporting trendline also) that should both intersect the EUR/USD downtrend at about 1.3060 in a couple of days. EUR/USD is now in a Wave 4 upwards correction and consolidation pattern that should keep it range bound for a few days and could take the price up to about 1.3130 to 1.3140 before the predicted decline to 1.3060.
Presented trading opportunities.
If our hypothesis turns out to be correct, then the trading opportunities will consist of:
1) shorting EUR/USD at 1.3130 to 1.3140 (depending on the elaborated wave pattern), with a target at 1.3060.
2) shorting GBP/USD at 1.9400 to 1.9500 (depending on the elaborated wave pattern),with a target at 1.9000 to 1.9100.
3) shorting EUR/GBP at about .6850 - .6875. The target would be at about .6700 to .6750.