EUR/GBP Weekly Outlook

By IBTimes Staff Reporter | January 04 2010 6:11 AM

EUR/GBP's rebound from 0.8850 was limited at 0.9053 and fell sharply to as low as 0.8855 so far. Current development indicates that whole fall from 0.9410 is still in progress for another low below 0.8833. Intraday bias remains on the downside for the moment and EUR/GBP should be targeting 61.8% projection of 0.9410 to 0.8833 from 0.9153 at 0.8786 next. On the upside, above 0.8957 minor resistance will turn intraday bias neutral and bring consolidations. But break of 0.9053 resistance is needed to indicate that EUR/GBP has bottomed out. Otherwise, risk will remain on the downside.

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In the bigger picture, at this point, we're still favoring the case that medium term correction from 0.9799 has completed with three waves down to 0.8399 already. Rise from 0.8399 is possibly resuming the long term up trend. Hence, fall from 0.9410 is viewed as a correction only and should be contained by 0.8704 support. Break of 0.9053 will suggest that correction from 0.9410 has completed and rise from 0.8399 is resuming for a test on 0.9799 high first and then 61.8% projection of 0.6535 to 0.9799 from 0.8399 at 1.0416.

However, break of 0.8704 support will argue that firstly, rise from 0.8399 has completed at 0.9410 already. Secondly, this will argue that fall from 0.9410 is likely the third leg of the correction pattern that started at 0.9799 and could extend beyond 0.8399 support before the whole correction concludes.

In the long term picture, long term up trend in EUR/GBP might be resuming as correction from 0.9799 has completed at 0.8399. Decisive break of 0.9799 high will confirm this bullish view and target 261.8% projection of 0.5680 to 0.7258 from 0.6535 at 1.0666. Break of 0.8704 will delay the bullish view but we'd still expect the long term up trend to resume sooner or later as long as 0.8186 support holds.

EUR/GBP

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