The odds appear stacked in favor of bears now. Given the head and shoulder breakout, I am plotting a fresh 5-wave bearish structure.
- This tells me a third wave is in progress and most probably an extended one.
- Also note bearish 21-day EMA and 55-day EMA.
- As pointed out yesterday in the EUR/GBP post, losses are being seen as pair fell back below 0.7633 (38.2% of Aug 2013 high-Nov 2015 low).
- Yesterday’s daily closing was also below 0.7633.
- Hence, there is little reason now for the cross to suddenly turn higher. Oversold intraday indicators could trigger a short-term loss of momentum, thus leading to sideways action.
- Overall, the cross appears destined to test daily 200-MA of 0.7516 levels.
- Bearish invalidation is seen only if prices see day end closing above 0.7750 levels.
