EURGBP - correction is in progress. Then down to 0.64 or lower!

FX:EURGBP   Euro Fx/British Pound
In this post I want to analyze the wave structure of EURGBP             of the last year so to get a feeling of the relative strength of both currencies in order to understand which one will have a larger downside potential against USD.

It seems that we are working through the corrective wave 4 of the descending impulse. The correction may take some time and its structure is hard to know for sure. One thing is certain: we are in a region of congestion which is choppy, overlapping and is contained within the parallel lines. This means that this region will be more than fully retraced at some point and we will continue moving in the direction set by the previous impulse (i.e. down).

The downward movement will be our wave 5, but this will not end the decline. I do believe the decline was ignited by a 1-2-1-2 structure, so once wave 5 of the inner impulse completes we will encounter another set of waves 4 and 5 of one upped degree.

In the next 3-4 months I do expect us to move to 0.64 on EURGBP             in wave 5, and until we reach this level it is hard to speak of any upside potential for EUR. This means that if I go for shorting any of DXY             components, my preference will be to EUR rather than GBP.

Note that the target of 0.64 assumes equality of waves (1) (3) and (5). Usually one wave extends, and since waves 1 and 3 were equal it would be pretty cool to see wave 5 extend delivering an even more spectacular weakness of EUR vs GBP.
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