Forex Technical Update
- The EUR/GBP in the 4H chart is in a classic bearish continuation setup. 1) RSI reading is held below 60, and about to break below 40. Breaking 30 reaffirms the bearish continuation scenario for the rest of this week and into the next. 2) The market respected the 200SMA after breaking below it, starting a slingshot to the downside. 3) The small channel seen in the 4H chart is broken to the downside with sharp candles.
- This is a very euro-sided move; we can observe EUR crosses such as EUR/USD, EUR/CHF etc. are all sliding.
- The daily chart shows a swing projection out of the recent corrective rally. This has an aggressive target of 0.85.
- There are some support clusters above the 0.85 projection. The 200SMA is near 0.8666 and can provide some minor support. A more critical support is near 0.8590, 61.8% retracement level and rising trendline.
- Clearing this not only opens up 0.85 in the short-term from that point, but towards 0.8360 (Feb Low), 0.8290 (Jan, and 2011 Low). These targets should be reserved for after a pullback to confirm the break below 0.8590, or rising trendline.
Will you be watching or following the reaction to the EU summit? Subscribe and become a member to share your views and join live discussions as well as webinars about the markets.
Fan Yang CMT
Chief Technical Strategist