Forex Technical Update July 15, 2010 EUR/GBP Looking to Continue Rally
- 1H: The 1H chart for EUR/GBP shows the pair unable to break below 0.8320 area. I mentioned in previous posts that a break below should give a bearish signal. However, the support and then a break above a declining pattern resistance suggests a rally is at hand.
- The RSI also breaks above 60 after not being able to break below 40.
- There is always still a chance that this is a whipsaw. We see that the pair is at the level that satisfies a swing projection and.
- This means there is some resistance expected at the 0.8366 area, 50% retracement. A break above this suggests there is enough bullish force behind the move for a rally to reach 0.8410. Also, a throwback followed by a rally would help confirm weakness of bearish attempts as well.
- Weekly and Daily: The weekly shows the market finding a bottom near 0.82. The 0.81 area was 50% retracement as well as the resistance of a long consolidation period in '08. Note the minor bullish divergence during this consolidation, suggesting a rally is at hand.
- If there is an impulse wave that started October last year, we are in wave 4. This wave should not go above 0.8650.
- Looking at the daily, we see that an immediate resistance if the market is above to break above the current consolidation is 0.848 area. This is 38.% retracement and a test of the sharp-declining channel resistance.
- A break above that should see a rally towards 0.8580/0.86. This is 161.8% extended retracement of the decline from 0.8380 to 0.8060. This is also 50% retracement area. These are the targets, and 0.8650 is the ultimate threshold for the bearish impulse wave scenario. This means a decline after that should at least reach 0.8060 area.
Fan Yang Currency Analyst Commodity Trading Advisor
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