EUR/GBP has been stuck in a clear sideways to higher range for the better part of three weeks since finding support at the 38% retracement of the July to February advance in the .8400 area. The broader technical picture remains negative, however, as the general weakness that has been exhibited in the cross since it failed at the .8800 long-term Fibonacci confluence zone suggests an important top was recorded back in February and March. Traction below the .8400 Fibonacci support level is now required to signal a resumption of the broader decline.
The short-term cyclical picture in EUR/GBP looks positive for a few days. A test of medium-term resistance in the form of the 2x1 Gann angle line of the year-to-date high, the 3rd square root progression of the year-to-date high and the 61.8% retracement of late April decline all in the .8525/45 area could be seen in the next few days and we like selling against this zone. A close over .8545 would signal that a stronger upside correction is underway.
EUR/GBP Daily Chart: May 16, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Event Risk Over Coming Sessions:
Source: DailyFX Calendar
LEVELS TO WATCH
Resistance: .8525 (2x1 Gann angle line of YTD high), .8545(61.8% retracement of late April decline)
Support: .8405 (38% retracement of July to Feb advance), .8385 ( 50% retracement of Nov to Feb advance)
STRATEGY – Sell EUR/GBP
Stop: Close above .8545
Target 1: .8405
Target 2: .8360
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