Forex Technical Update July 7, 2010 EUR/GBP: Stalking Possible Topping Action
- 1H: The Euro has been gaining against the Pound since last week. This is in the context of a downswing since mid-March. Therefore, the overall mode is still bearish. You can see that more clearly in the daily chart.
- The 1H chart shows some short-term topping developing. This pair continued to rally this week, but was stalled since the latter part of yesterday's US session. To start today's US session, the market is attempting a break below the consolidation.
- A true signal of topping would come from a close below 0.8295, the previous resistance, which could support the rally. Also note the rising support, which would be broken concurrently.
- A momentum signal from the RSI occurs when it crosses below 40. We see that the last 2 lows for the RSI has been the 45 area, and the market is already testing that. A clean break below 45 is already an early signal, a break below 40 is a stronger one.
- Daily: The EUR/GBP in the daily chart shows a possible negative reversal forming. This is premature as the day has not closed. However, we do see that price may have topped before the previous top near 0.84. The RSI however is higher.
- A swing projection targets 0.8025.
- If the market turns down here, at 38.2% retracement (0.8337), it would miss the channel resistance, and the 50-period moving average. Therefore, a logical area for a stop may be above this 0.84 area.
Fan Yang Currency Analyst Commodity Trading Advisor
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