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Will Euro/ British Pound Bulls Pause for Breath?

Currencies / British Pound Oct 09, 2009 - 12:20 PM GMT

By: Seven_Days_Ahead

Currencies Best Financial Markets Analysis ArticleAn impressive upmove in EUR/GBP has shaken off medium term bear risk, we believe – any pullbacks now will most likely be temporary/corrective ahead of further upside. It is worth looking at the current technical position, and supports to any slip back.


The FX Trader’s view


 WEEKLY CHART:

Earlier this year we said there was greater bear risk, following the erosion of the 38.2% pullback level.

However, failure to hold below this, and subsequent impressive recovery – including breach of the bear channel top projection which implies serious loss of former bear momentum, has definitely tilted the scales in favour of bulls once more.

 

 

DAILY CHART:

Price action has now reached, and paused at, the 61.8% recovery level, finding support from near old 0.9082/72 highs (and just through the 23.6% pullback).

Bulls will be targeting the higher 76.4% retracement but we just wonder if the s/term chart structure allows for a further pullback attempt prior to a move to the higher levels.

(There is a small negative divergence on the RSI too, not shown)

At this stage we would not be looking for a deep pullback – the 0.8976 38.2% area would be the first focus of attention. And the fact that price had dropped back into the old bear channel would not harm the overall bullish outlook in any way.

Mark Sturdy
Philip Allwright

Seven Days Ahead
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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.

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