EUR/GBP Elliott Wave Analysis

EUR/GBP –  0.8036 EUR/GBP – Major double three correction from 0.9805 ended at 0.8067 and gain to 0.9200 is likely. The single currency ended last week near the week’s low and opened lower this week, price then extended recent decline to as low as 0.8001 today, suggesting downtrend is still in progress and further weakness to 0.7973 (61.8% projection of 0.9084-0.8222 measuring from 0.8506) would be seen, however, near term oversold condition should limit downside to 0.7936 (1.618 times projection of 0.9084-0.8531 measuring from 0.8831) and reckon 0.7895-00 (100% projection of 0.8831-0.8222 measuring from 0.8506) would hold from here, risk from there is seen for another rebound probably in late Q2 of 2012. Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.8067 and as labeled as the attached daily chart and impulsive move has commenced from there with wave i ended at 0.8532, followed by wave ii at 0.8143. The wave iii itself is an impulsive move and is sub-divided into 1-2, (1)-(2) with minor wave 1 ended at 0.8941, followed by wave 2 at 0.8285 and wave 3 has commenced from there and is unfolding. On the upside, expect recovery to be limited to 0.8150 and bring such a decline to aforesaid downside targets. Only above resistance at 0.8222 would suggest a temporary low is formed and bring retracement to 0.8350 but break of resistance at 0.8424 is needed to confirm and bring a stronger rebound to 0.8470, however, price should falter well below resistance at 0.8506. Recommendation:  Sell at 0.8150 for 0.8000 with stop above 0.8230. Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805. We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there to 0.8067 is the wave IV, however, it is necessary to see a daily close above resistance at 0.9143 would change this to be the preferred count.