EUR/GBP- the ‘royal’ pair inviting bears…!!!

Thu, Aug 13 2009, 15:26:07 GMT

 

Over the last 3 months, the Cable has been moving in a sideways range of 0.8400 and 0.8670.

It was a good month for the Euro, which appreciated against the Cable. Through the month, it rose heavily after testing the upward sloping support of 0.8454. Overall, the Fiber gained about 18.53% over the trailing 2 weeks period. Last week, an increase in retail sales and Sentix investor confidence in Europe along with a fall in the UK Goods Trade Balance proved positive for the pair.

 

On the daily frame, a triangle formation suggests correction on the cards after a good rally. The pair now looks a bit stable around .8630, currently trading near the downward sloping resistance line. On the 4 hour chart, the overall scenario is bearish with the pair still moving rangebound between 0.8400 - 0.8670. In the next week, the European Consumer Price index is likely to cause bears to enter as both the Stochastic and ADX indicators are pointing towards the downside. From here, the next resistance level for the pair is 0.8645 and the support level is 0.8471. Bears can count on picnic baskets in the coming weeks as the Fiber (likely) breaks the Alligator moving averages in a week or so, which will lead to a substantial downside potential to .8471 levels with a tight stop loss at 0.8652.

EURGBP