Euro has been taking advantage of the Pound’s recent weakness and price action activity, with GBP/USD weakening due to the USD’s overall strength, thus triggering a bullish sequence on EUR/GBP. However, the larger pictures could point towards more weakness ahead.
EUR/GBP finalized a larger degree pattern back in early August 2018 and then commenced a gradual downtrend.
This bearish possibility was explained and shared with Orbex traders via the “Trends And Reversals – Patterns And Correlations” article. In fact, all mentioned markets performed as expected with that impressive article.
August 9th, 2018 flash-back, and the previously posted chart.
EUR/GBP – Wave Analysis
EUR/GBP – 4H Chart
As the down-trend unfolded, EUR/GBP began displaying a set of corrective features, with Intermediate degree (A) (red) presenting overlaps with its bearish swings. Intermediate (A) (red) has been labeled in an ABC (blue) Minor degree sequence, with a Running Flat in Minor B (blue).
Following the conclusion of Intermediate (A) (red), the EUR/GBP reacted on the up-side with a three-swings sequence, which has been classified as Minor A (blue), the first leg of the larger degree structure in Intermediate (B)(red).
Intermediate (B) (red) has been classified as a potential Expanding Flat pattern, as Minor B (blue) exceeded with its corrective swings the start of Minor A (blue), and Minor C (blue) advanced higher than the end of Minor A (blue).
Minor C (blue) could finalize its impulsive five-wave sequence at or around the 200% Fibonacci Extensions of Minors A & B (blue), where a Bearish Divergence could put an end to the bullish momentum.
From the Harmonics stand-point, the price action on September 21st, 2018, could reflect a Bearish Shark pattern.
EUR/GBP could be poised for limited upside and possible completion of the bullish sequence, as the larger degree wave counts could be pointing towards more down-side moving forward.
Many pips ahead!