miroslava.micunkova's picture

Is EURGBP still looking into unfavourable future?

EURGBP has been moving in a 6 years+ bear channel after hitting an all-time traded high at .9801 in 2008. Two major counter-trend movements developed in 2010-2011 and 2012-2013 leaving two consecutive lower tops at .9083 & .8769.

The latest decline from the .8769 August 2013 recovery peak is still under way today. The lower channel base (at .7366) is now coming under severe attack, already being overshot. The close of the candle for this month may give us more clue of a potential short-term bounce; however close below the .7366 bear channel base will warn of further losses.

We fear that the bearish scenario is more likely at this stage as several negative signals emerged in December 2014.  Among them was a break of the 10-year moving average followed by a clearance of .7784 (61.8% retracement of .6537-.9801 advance). The last evidence of the list is the following break down of the .7757-68 area, which held support since 2008. All this has contributed to the bearish momentum highlighted green on the chart.

Our nearest downside target points at .7307. (76.4% retracement of .6537-.9801 advance) The next long term target (6 month +) points at .7061 (calculated as 100% projection of .8769-.7768 from .8062). Further out we are also looking at 100% retracement for the EURGBP with a price action returning back towards .6537 January 2007 lows. 

Please see GBP fundamental review at http://bit.ly/1B86Xmm

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