The FX Trader’s view –
Bulls in EUR/GBP have taken their time to emerge, much of Jun/Jul/Aug marked by a consolidation phase. We had tended towards a positive resolution of this, and there is scope for this cross rate to move higher shorter term.
- WEEKLY CHART: The 38.2% pullback level was violated earlier this year, suggesting that the 2009 bear move had more to go. This can still be the case but, shorter term, good support has emerged from the rising support line, and we must go with the trend. Check out the Daily chart for more detail.
- DAILY CHART: After good support was found from the 0.8700 Jul high area temporary resistance came from our first target around 0.8800/15 – included a 38.2% level and falling resistance line. There has now been a clear break above and the next hurdle at 0.8945 has also been overcome – we weren’t sure if this would be, but the current chart structure shows no immediate sign of bull fatigue. Next stop? The dual retracement area of 0.9072/0/9100, which coincides with old Feb/Apr highs at 0.9072/82. Combined with the bear channel top projection above, at 0.9150, this area should be tough to crack (but a clear break would force us to reassess medium term bear risk).
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