EUR/GBP’s strong break of near term channel support last week suggests short term topping at 0.9097. More importantly, the choppy corrective structure of the rise from 0.8620 argues that it’s a correction that’s completed. Initial bias remains on the downside this week with focus on 38.2% retracement of 0.8620 to 0.9097 at 0.8915. Firm break there will affirm our bearish view and target 61.8% retracement at 0.8802 and below. On the upside, though, above 0.9005 minor resistance will turn focus back to 0.9097 high instead.
In the bigger picture, EUR/GBP is staying in long term range pattern from 0.9304 (2016 high). At this point, there is no clear sign of range break out yet. And more corrective trading would continue. On the upside, in case of another rise, we’d stay cautious on strong resistance from 0.9304/5 to limit upside in case of further rally. Meanwhile, if there is another medium term decline, strong support will likely be seen from 0.8303 to contain downside.
In the long term picture, we’re holding on to the view that rise from 0.6935 (2015 low) is resuming the up trend from 0.5680 (2000 low). Hence, after the consolidation from 0.9304 completes, we’d expect another medium term up trend through 0.9799 to 100% projection of 0.5680 to 0.9799 from 0.6935 at 1.1054.