EUR/GBP Weekly Outlook

By IBTimes Staff Reporter | July 31 2010 6:51 AM

EUR/GBP's fall from 0.8530 extended further last week and the break of 0.8316 support suggests that rebound from 0.8067 is finished. Initial bias remains on the downside this week and further fall should be seen to retest 0.8067 low. On the upside, above 0.8394 will turn intraday bias neutral and bring recovery. But even in such case, break of 0.8530 is needed to confirm rise resumption. Otherwise, outlook will be neutral at best.

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In the bigger picture, whole decline from 0.9799 is viewed as a three wave correction from to the larger up trend. Current development suggests that another low below 0.8067 would likely be seen before such correction finishes. Though, focus will remain on reversal signal inside 0.7693/8186 support zone. On the upside, break of 0.8530 resistance will revive the case that such correction is already finished. Decisive break of 0.8610 support turned resistance will further affirm the case that long term up trend in EUR/GBP is resuming and will target 0.9410 resistance for confirmation.

In the long term picture, correction from 0.9799 is expected to be contained by 0.7963/0.8186 support zone and bring up trend resumption. Rise from 0.5680 is still expected to extend beyond 0.9799 high eventually.