Forex Technical Update July 13, 2010 EUR/GBP Respecting Channel Resistance
- Daily: The euro has been very strong the last couple of weeks, surging against the Sterling. The daily chart however reminds us the overall market mode, which has been euro bearish relative to the pound.
- The market started this week testing the 0.8420 area, which was 50% retracement, a previous support, and 50% retracement. The market respected this confluence of resistance.
- If the market closes today where it it at the moment, candlestick combination also suggests a reversal is developing.
- A negative RSI reversal projection targets the 0.7850 area.
- 4H: The 4H chart shows a completed head and shoulders. The market showed strong decline to complete this topping action so a whipsaw is unlikely, although not impossible.
- One way we can check is to 1. wait for the RSI to break below 40. 2. Wait for a rally that may occur at the 0.83/0.8285 level. This is a confluence of support factors (38.2% retracement), SMA200, and the 0.829 powerline).
- I would like to see if the market can reject this rally and preferably see it top off below 0.8340. There the bearish outlook is confirmed.
- Still, before getting too ahead of myself for the 0.7850 target, the 0.82 (61.8% retracement level), is the first near-term target.
Fan Yang Currency Analyst Commodity Trading Advisor
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