GBP/USD 1.3985 vs EUR/GBP 0.8659

Brian Twomey Brian's Investment

At week's beginning, GBP/USD not only closed at 1.4110 but above vital 1.3985. While EUR/USD broke below 1.2111, NZD/USD 0.7176 and AUD/USD at 0.7707, GBP/USD as the outlier sat above 1.3985. GBP/USD lower must break 1.3985 and 1.3985 is located right around the 100 day average at today's correct 1.3960.

A total of 4 times in the last 2 months, we've seen EUR/USD, AUD/USD and NZD/USD break below vital averages and GBP/USD remains trading above. EUR/USD, AUD/USD and NZD/USD always recovered and traded higher. What forced EUR/USD, AUD/USD and NZD/USD higher was deeply oversold EUR/CHF, AUD/CHF and NZD/CHF.

EUR/USD, AUD/USD and NZD/USD were unable to sustain lower levels against not only oversold CHF but a non compliant GBP/USD. GBP/USD must not only break 1.3985 but GBP/CHF must trade below 1.2632 to lend confidence to EUR/USD, AUD/USD and NZD/USD vital breaks.

Currency markets not only requires conformity but concurrence lacks among many currency pairs in the present trading environment. More divergence exists currently rater than compliance. And many examples exist.

AUD/USD below 0.7707 and EUR/AUD below at 1.5713. This divergence can't hold and explains EUR/AUD higher today. GBP/AUD traded above 1.8150 while EUR/AUD below 1.5713. More divergence that can't hold.

Holding up GBP/USD to move lower and break 1.3985 is EUR/GBP at most important 0.8660. Current EUR/GBP is not only deeply oversold but EUR/GBP is a USD pair and Correlates to GBP/USD at -95%. A higher EUR/GBP represents a lower GBP/USD. Once EUR/GBP breaks 0.8659 then uniformity exists again to EUR/USD, AUD/USD and NZD/USD to not only break lower but sustains to trade much lower levels.

EUR/GBP for today's day trade until 10:00 AM EST contains 5 vital points 0.8546, 0.8568, 0.8579, 0.8612 and 0.8634. Its a matter of time before EUR/GBP breaks higher from 0.8659.

GBP/USD to match EUR/GBP 0.8634 then lower levels are located at 1.4048, 1.4058 and 1.4074 and 1.4083.

Once GBP/USD achieves lower levels, it trades higher and lower for EUR/GBP.

EUR/GBP on a weekly trade must break 0.8639 and 0.l8649 to challenge 0.8659 and higher to 0.8720 then 0.8740.

The better trade however is GBP/USD instead of EUR/GBP due to GBP/USD more expansive ranges EUR/GBP.

Overall averages for GBP/USD point lower while EUR/GBP averages point directly higher. EUR/GBP 200 day average is located at 0.8755 and 0.8628 at the 50 day average.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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