EUR/GBP Weekly Outlook

By IBTimes Staff Reporter | August 07 2010 5:31 AM

EUR/GBP dropped further to as low as 0.8253 last week but recovered since then. Nevertheless, note that rebound from 0.8067 is likely completed at 0.8530 already. Hence upside of the current recovery should be limited by 0.8394 resistance and bring another fall. Below 0.8253 will target 0.8067 and below. Nevertheless, above 0.8253 will mix up the outlook and turn bias neutral again.

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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.