EUR/GBP in Breakout Mode for More Upside Correction

Previous: EUR/GBP Ranging Ahead of ECB and BoE Meetings (9/5)

EUR/GBP 4H Chart 9/7/2012 8:10AM EDT

The EUR/GBP is seen in the 4H chart shooting like a rocket above and away from some recent consolidation price action. It note only cleared the consolidation in the short-term with resistance at 0.7955, but also broke above the 0.7960 August, medium term consolidation resistance pivot. It broke a declining trendline, but you will see in the daily chart, that there is another one with a lesser speed of decline still above.

Also note that even though price lows were making lower lows in the late August consolidation, the RSI remained above 40 for the most part, reflecting maintenance of the bullish momentum, albeit a week one during during mid to late August. Now the RSI is tagging 70, and showing bullish continuation momentum at least in the short-term.

The daily chart shows a market in an attempt to break a declining trendline that goes back to the Oct 2011 high near 0.8825. Clearing above 0.80 is likely a strong breakout of this trendline, and would clear 61.8% retracement of the 0.8165 to 0.7756 swing since June into July. Also note the RSI reading attacking 60, a break above which shows loss of bearish momentum.

The next key resistance around is another declining trendline that goes back to the 2011 high of 0.9083 set on 7/1/2011. The current bullish breakout attempt is exposing the market toward the trendline, which is probably near the 0.81 handle when price gets there.

EUR/GBP Daily Chart 9/7/2012 8:15AM EDT

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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.