(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend line in green; downtrend line in red; horizontal support/resistance lines in yellow; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)
3/20/2008 â€“ EUR/GBP â€“ Price action on the EUR/GBP daily chart, as shown, appears to have just reached yet another plateau. In bullish mode since around September 2007, this key cross has been moving steadily up from one horizontal trading range to another ever since. As of this writing, the last four days of price action have seen this currency pair tentatively establish the initial stages of what appears to be yet another horizontal trading range. The current formation may also be seen as the beginnings of a flag pattern. Therefore, technical traders should be waiting for any significant breakout of the current consolidation. In terms of direction, there is somewhat of a technical bias towards an eventual break to the upside, as a strong long-term uptrend is firmly in place, and flags are often seen as relatively reliable trend-continuation patterns. A breakdown of the current consolidation with significant follow-through, on the other hand, would mean that we have just reached and retreated from a decade-long high in the pair. In this event, the next major support level to the downside resides at the top of the last horizontal range, in the 0.7600 region. This level also coincides with the key 61.8% Fibonacci retracement level (the low-to-high retracement span being measured from the swing low on 2/14/2008 to the current decade-long high reached on 3/17/2008).
Chief Technical Analyst
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