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

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.