Our mid-term Elliott Wave cycles remain firmly bearish in EURGBP. Pair tested the inflection area between 0.7591 – 0.7618, got rejected and turned lower as expected. Cycle from the lows is over so connector wave (( X )) is thought to be in place at 0.7591. Decline from this high is so far in 3 waves but there is enough extension in 3rd swing that we could see another low to complete 5 waves down from the high. Once Elliott wave cycle from the high is over, we would expect a bounce in wave (b) to correct the decline from 0.7592 high in 3, 7 or 11 swings and decline should then resume for new lows below 0.7402 as per the primary Elliott wave view. Price above 0.7529 would leave the decline from 0.7592 peak in 3 waves and pair could then test 0.7538 – 0.7551 area before it turned lower again. We don’t like buying the pair and favour the short side after bounces in 3, 7 or 11 swings against 0.7591 high in the first degree. If this level breaks, that would allow for a larger (W)-(X)-(Y) correction and we should see sellers again at equal legs – 1.236 ext area.
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