As in the EUR/USD (Update 12/05/11) the EUR/GBP cross recently displayed a key reversal week, which implied at least a temporary halt in the 2011 uptrend. This week’s violation of key support now suggests a weakening in upward momentum.
- WEEKLY CHART
The earlier breach of falling resistance looked to be a positive sign but note how the old rising support/return line (underside of the old triangle) resisted bulls’ advances.
A negative key reversal week resulted, suggesting a better pullback phase to come.
See how previous key reversal weeks have worked. - DAILY CHART
In fact there was also a key reversal day on 05-May which encouraged the s/term bears.
In the FX Specialist Guide we have been looking at key support from the area of the 0.8672 26-Jan high and bull channel base projection. The recent breach of these signals loss of upward momentum and is a boost for the bears.
One possible lower support comes from the 0.8462 76.4% retracement of the 2011 gains. More key though would be the longer term channel base support.
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