Temporary Bounce in EUR/GBP Now Possible
Currencies / Forex Trading Jul 03, 2009 - 06:37 AMBy: Seven_Days_Ahead
A few weeks ago a long term 38.2% support in EUR/GBP was violated, adding weight to the medium term bearish argument that we have been favouring. However, without this view being threatened, there is a decent chance for a shorter term bounce, subject to a certain resistance yielding.
The FX Trader’s view
 |
WEEKLY CHART: Breaks of both the 0.8636 Feb low and 0.8555 38.2% level have helped the bears’ cause. Next main support here starts at the 0.8186 Sep-08 high, through 0.8168 50% level and down to a 1.618 swing projection (off prior 0.8636-0.9490 upleg) around 0.8108. But, note how temporary support has emerged from the old rising resistance/ return line. |
|
DAILY CHART: As well as the nearby rising return line there was also a Fibo projection just above 0.8400, which may have helped to give bears pause. In the FX Trading Guide we have said that a close above the 0.8636/55 area (10-Feb low and 23.6%) would be s/term bullish (this has provided effective s/term resistance earlier today). We would at least target the 0.8815 38.2% level and, at this stage, would probably not look beyond the higher 0.8945 50%. An assessment of the relative strengths of EUR and GBP should |
take into account the Almost-Key Reversal Day seen in Cable on 30-Jun, which we view as a fresh bear sign, a possible blow-off move prior to a more concerted bear attempt…In EUR/GBP the bears would win out on a break below the 0.8397 22-Jun low. High risk, pre-emptive buys on dips could favour the 0.8535-15 area, stops just below 0.8397, targeting 0.8800 for partial profits, stops then rising to cost. We are reluctant to trades breaks as these provide the least favourable entry level, so after a close above 0.8636/55, buyers may favour waiting for a suitable dip, to be later discussed in upcoming
FX Trading Guides.
Note for FX Trading Guide Subscribers: As suggested in this week’s Guide we maintained a bear view in GBP/USD in the absence of a close above the 1.6661 03-Jun high. This was, as mentioned above, supported by a near key reversal day on 30-Jun. Any sellers on rallies may favour the low end of a 50%-61.8% rebound from whatever low at the time (currently 1.6535-85), generous initial stops just above 1.6744 30-Jun high, or less generously above the 76.4% level (1.6645/50 currently).Target towards 1.6000 for partial profits. In EUR/USD we had tweaked our short stops to just above a 76.4% level, to 1.4205. A subsequent bounce came within a whisker of this but, hopefully, short positions remain intact.
Philip Allwright
Mark Sturdy
Seven Days Ahead
Be sure to sign up for and receive these articles automatically at Market Updates
Mark Sturdy, John Lewis & Philip Allwright, write exclusively for Seven Days Ahead a regulated financial advisor selling professional-level technical and macro analysis and high-performing trade recommendations with detailed risk control for banks, hedge funds, and expert private investors around the world. Check out our subscriptions.
© 2009 Copyright Seven Days Ahead - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
Seven Days Ahead Archive |
© 2005-2012 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
Comments
Post Comment (Moderated)