Forex Technical Update

Previous: EUR/GBP Retreating from 0.81 and Key Trendline (9/18)

EUR/GBP Daily Chart 9/21/2012 7:25AM EDT

EUR/GBP 9/21/2012 Daily Chart

The previous EUR/GBP noted resistance at 0.81, coincident with a major declining trendline. The market indeed extended a retracement against the July – September rally. I mentioned an analogy with the previous bearish corrections that were followed by a bullish swing higher than the starting point of the correction. The projection was targeting 0.7960, where the EUR/GBP would meet some support factors. As we gear up fro the 9/21 US session, this scenario is about to be complete.

Support: The 0.7960 area is a previous pivot and almost coincident with a rising trendline, which is probably just below, near 0.7950. The 4H chart shows the market trading within a declining channel, accelerating a bit as we come to the last trading session this week. I would say at this point, only a break above the channel resistance, and above the 0.8020 pivot area would bring back the bullish outlook and refocus the EUR/GBP toward the 0.81 pivot for a breakout of a key trendline to the upside.

Bearish scenario: The RSI is showing lost of bullish momentum. A break below 0.7950, pushing the RSI to 30, might be initial signs that the EUR/GBP market is turning bearish in the medium-term, which would expose the 0.7755 2012-low.

EUR/GBP 4H Chart 9/21/2012 7:30AM EDT

EUR/GBP 9/21/2012 4H 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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