After 3 days of selling pressure, and a 62% correction to August’s decline, yesterday saw a reaction. Profit taking, from oversold extremes saw EURGBP bought at marginally higher levels and the bulk of the previous day’s net decline regained. But demand lacked the momentum to seriously retest the 13 day mvg avg and it is the upside failure that keeps our technical signals negative, especially with the potential for a Bearish Evening Star on weekly charts.
US data and Yellen's speech are both likely to create volatility but confirmation of that pattern, a NYK close below .8563, would have more medium term significance on the downside with potential I feel for .8295. (Take a look at similar patterns in GBPCHF and GBPJPY)
Intraday and ahead of the events I feel there is still downside scope with .8532 and .8513 in focus. Only above .8594 would be considered positive.
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