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. Pair could test 0.7465 – 0.7449 area to finish an impulse down from the highs. RSI divergence must stay intact for the impulse idea to remain valid. If RSI divergence is erased then pair could test 0.7408 – 0.7383 area in 7 swings to end the current cycle. Once Elliott wave cycle from the high is over, we would expect a bounce in wave (b) or (x) 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. 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. In the unlikely event of a break above this level, look for a larger (W)-(X)-(Y) correction and we should see sellers again at equal legs – 1.236 ext area from the lows.
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