Forex Technical Update August 2, 2010
 Comparing Euro to Sterling's Rally Against the Greenback

  • Daily: The EUR/USD is starting this week very strong. This is an acceleration entering into a strong resistance zone so I am very interested to see what happens next.
  • I suspect this could be an exhaustion move. I think if the market breaks above 1.3250, then it is strong enough to signal a bullish outlook.
  • The RSI is entering overbought area, but it could be indicative of overbought conditions if the market has turned ranging in the intermediate term.
  • In the short-term, I am going to monitor the resistance zone to see if topping action and reversal action will develop.
  • I think the intermediate to long term bearish mode is still intact, until the market breaks above 1.37 area. A break above 1.3250 invalidates bearish outlook, and confirms ranging and signals possible bullish outlook. A break above 1.37 will confirm bullish outlook.


  • Daily: GBP/USD, unlike the EUR/USD, is no longer ranging, but bullish. Last week's break above 1.55 invalidates the bearish outlook, and also signals a bullish outlook.
  • Today, the market is testing 1.59 area, near the 61.8% retracement. I suspect a throwback towards 1.55 is imminent, but the pair is definitely signaling bullish outlook in the intermediate term.
  • Therefore, looking at EUR/USD and GBP/JPY, both have much uncertainty, but the GBP/USD has more likelihood of continuing to rally, whereas the EUR/USD has more risk of falling back after the current rally.
  • This assessment is more likely to be correct if the outlook for EUR/GBP is also bearish.

  Fan Yang
Currency Analyst
Commodity Trading Advisor

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