EUR/GBP dropped further to as low as 0.8238 last week and the strong break of 0.8284 support confirms that corrective rebound from 0.8067 is finished with three waves up to 0.9083. initial bias remains on the downside this week and deeper decline should be seen. Next target will be 0.8067 support. On the upside, though, above 0.8291 minor resistance will suggest that a short term bottom is in place, possibly with bullish convergence condition in 4 hours MACD. In such case, stronger rebound should be seen back to 0.8420 resistance before staging another decline.

In the bigger picture, price actions from 0.9799 are treated as a consolidation pattern in the long term up trend. Fall from 0.9083 is viewed as the third leg and is now heading to 61.8% projection of 0.9799 to 0.8067 from 0.9083 at 0.8013 (which is close to 0.8 psychological level). We'd still expect strong support inside 0.7693/8186 support zone, possibly near to 61.8% retracement of 0.6535 to 0.9799 at 0.7782) to contain downside to finish off the consolidation. On the upside, though, break of 0.9083 resistance is needed to indicate completion of the whole pattern from 0.9799. Otherwise, there will also be risk of another fall even in case of rebound.

In the long term picture, long term up trend from 2000 low of 0.5680 shouldn't be over yet and the choppy fall from 2008 high of 0.9799 should be a correction only. We'd expect such correction to be contained by 0.7963/0.8186 support zone and bring up trend resumption. Rise from 0.5680 is still expected to extend beyond 0.9799 high eventually.

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