Forex Technical Update

Previous: EUR/GBP Staying Above Rising Trendline and 50% Retracement (10/1)

EUR/GBP Daily chart 7:18AM EDT 10/09/2012

EUR/GBP 10/9/2012 daily chart

Rally vs. Trendline: The EUR/GBP is coming off a 6-day rally after finding support at 0.7920. This latest upswing comes with some bullish momentum as the daily RSI reading had tagged 70, held above 40 and is now above 60 back towards 70 again. However, price action is up against some key resistance factors around the 0.81 psychological handle. The market has so far reacted with some supply a this level.

Resistance: The daily and the weekly chart shows a falling resistance going back to the July 1, 2011 high of 0.9082. Above 0.81, the previous resistance pivot is at 0.8120, which is coincident with the 200-day SMA. Right above that, the 0.8155 resistance pivot challenges the rally. Clearing above 0.8155 is a major accomplishment for the euro against the sterling.

Crossroad: Under 0.81, the EUR/GBP is basically at the crossroad between the falling resistance from July 2011 and a rising trendline from the July 23 low of 0.7756.

Fibonacci retracements: The weekly chart shows some fibonacci retracement levels for a reversal scenario that comes with the break above the noted falling resistance. A strong retracement can be projected toward the 61.8% level at 0.8576. A conservative first target in the short-term could be the 38.2% retracement at 0.8263.

EUR/GBP Weekly Chart 10/9/2012 7:20AM EDT

EUR/GBP 10/9/2012 weekly chart

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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