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Technical Analysis: Currencies

EUR/GBP

Thu, Oct 22 2009, 12:45 GMT
by Nicole Elliott

Mizuho Corporate Bank  |  View company's profile


Comment: Last week’s ‘bearish engulfing’ candle with a ‘spike high’ at its top suggests that an immediate meltdown in the value of sterling has been postponed, and maybe averted for the rest of this year. However, as we remain just a whisker away from the all-time low on the Bank of England’s Trade Weighted basis there is absolutely no room for complacency. While above 0.8400, two standard deviations from the equivalent long term mean at 0.7135, the danger is that EUR/GBP will be drawn to parity (and even higher). For the next couple of months we favour random, fairly sharp swings, between 0.8600 and 0.9400.

A weekly close above 0.9435 would set off another concerted upside push.


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