EUR/GBP to Test Support after Retracement Pattern
- Weekly: The EUR/GBP continued its swing, as anticipated earlier this week and in yesterday's Chartist Corner. (Refer to Daily Video Technical Update 3.29.2010). It is within the context of a large congestion triangle, which we can see in the weekly chart. The weekly chart suggests a bearish intermediate-term mode.
- Daily: I mentioned that a a break below 0.8850 may lead to further decline to 0.8650. The market just broke below 0.8850.
- Notice in the Daily that the decline essentially completes a bullish Gartley. The 2-swing projection was each an expanded flat. Connecting the right tops and we have a declining trendline.
- Now we are set up for 2 alternative scenarios. If the market reaches 0.8820 area (61.8% retracement and projection swing), look for some bottoming action.
- Then, the rebound from that will give you a clue. If it is a pullback, it will be weak and likely stay below the declining resistance. If it is strong enough to break above 0.89 and the declining trendline, we can invalidate the short-term outlook to 0.8650.
- The MORE likely scenario is a continued decline to 0.8650. The stochastic is very bearihs, and the price action is strong. Look for a quick correction near 0.8820, but the short-intermediate term target is the 0.8650 area.