Despite edging higher to 0.8883 last week, EUR/GBP reversed and subsequent fall indicates that recovery from 0.8704 has completed. Initial bias is mildly on the downside for 0.8704 first and break will confirm resumption of the whole fall from 0.9083. In such case, next downside target will be 0.8610 key support next. On the upside, above 0.8883 will bring another recovery towards 61.8% retracement of 0.9083 to 0.8704 at 0.8938 instead.

In the bigger picture, price actions from 0.9799 (2008) should be unfolding as a consolidation pattern in the long term up trend. The first leg is completed with three waves down to 0.8067. With weekly MACD breaking its trend line, the second leg has possibly finished with three waves up to 0.9083 too. Focus is now on 0.8061 support and break will indicate that the third leg of the correction has started for another low below 0.8067. On the upside, break of 0.9083 is now needed to confirm resumption of rebound from 0.8067. Otherwise, we'll stay mildly bearish in the cross.

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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