The FX Specialist view – An impressive upmove in EUR/GBP has shaken off medium term bear risk, we believe – any pullbacks now will most likely be temporary/corrective ahead of further upside. It is worth looking at the current technical position, and supports to any slip back.
- WEEKLY CHART:
Earlier this year we said there was greater bear risk, following the erosion of the 38.2% pullback level.
However, failure to hold below this, and subsequent impressive recovery – including breach of the bear channel top projection which implies serious loss of former bear momentum, has definitely tilted the scales in favour of bulls once more.
- DAILY CHART:
Price action has now reached, and paused at, the 61.8% recovery level, finding support from near old 0.9082/72 highs (and just through the 23.6% pullback).
Bulls will be targeting the higher 76.4% retracement but we just wonder if the s/term chart structure allows for a further pullback attempt prior to a move to the higher levels.
(There is a small negative divergence on the RSI too, not shown)
At this stage we would not be looking for a deep pullback – the 0.8976 38.2% area would be the first focus of attention. And the fact that price had dropped back into the old bear channel would not harm the overall bullish outlook in any way.
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