That EURGBP Again
EURGBP broke above the Oct 2010 trendline resistance of 0.86, now facing the next key obstacle at the 100-week MA of 0.8660s last broken since Nov 2010. The pattern of lower-highs remains intact as two major trendlines continue to hold: (i) March 2010 trendine (red) and (ii) Dec 2008 trendline (black), both suggest subsequent pressure point near 0.8770-80s. Positive stochastics on the weekly chart appear to support further upside towards testing the 100-week MA of 0.8660s until the more important barrier of whether 0.8770-80s.
FUNDAMENTALLY, EURGBP is supported in the near-term, especially if the Bank of England makes no surprise and holds rates unchanged. The decision would disappoint some of those who may expect a rate hike as early as this month after the unexpected addition of one more hawkish dissent at last months MPC (Dale joining Weale and Sentence). While leaving rates on hold this week may mean a negative knee-jerk reaction for GBP and a short term bounce in EURGBP towards 0.8700s, it does NOT alter markets pricing of rate hikes at the April and/or May meetings. Upon those expectations, GBP will likely preserve some foundation, hence prevent EURGBP from breaking out i.e. closing above 0.88, which would be deemed as the ultimate break of the major trendline resistance (red).
Also FUNDAMENTALLY--on the EURO side of the story, is the lingering issue of peripheral debt. The latest downgrades of Spain and Ireland were shrugged off, but the possibility of a Portuguese bailout is back up as 10-year bond yields stand above 7% for the 23rd straight day, which is well above the 17-day duration that triggered the bailout of Greece and Ireland. All of these are potential negative dynamics for EUR, which validate the 0.88 resistance, a level, above which EURGBP could consider stops for intermediate targets at 0.85 & 0.8380s.
More Hot-Charts
-
Nasdaq100 Update
Sep 12, 2024 18:11 | by Ashraf LaidiSince entering Nasdaq100 Longs on Monday at 18550, we kept accumulating and locking gains until 19230 yesterday and 19380 today. -
Pre CPI Charts
Sep 11, 2024 13:05 | by Ashraf LaidiWill Nasdaq extend gains towards 18980s this week before retracing lower on the week of the Fed. -
Nasdaq100 Daily & Weekly
Jul 17, 2024 17:53 | by Ashraf LaidiThe triple top in weekly RSI suggests the following price and time implications: . PRICE: 18700. TIME: Duration of downside may last for another 3 to 4 weeks.
and it worked out pretty well. I don;t normally trade this pair but I have good spread with CMC :).
Rgds,
@RiskVReward
www.twitter.com/RiskVReward
I'll keep an eye the other EUR pairs you mentioned - looks like the double-tops are on the weekly charts - thanks! And best of luck with the new Premium FX Service! All of your followers have been waiting for this day.
Ashraf
Ashraf
EURGBP breaks above its 100-week MA of 0.8660, and is now nearing the 0.8770 barrier alerted in the latest HotChart Daily stochastics and RSI point to BEARISH DIVERGENCE.
Tomorrows UK Feb CPI could strengthen expectations of a BoE rate hike and drag down EURGBP in the event that the 4.2% print does materialize. With UK inflation twice as much as that of the Eurozone, the case for a BoE tightening remains stronger. But all of these are details impacting the short term dynamics of EURGBP.
More negative US data (-9.6% decline in existing home sales) will not help the case for removing QE2. Silver and Gold attempting to regain their Mar 7 highs. Long term picture
remains favourable for silver relative to gold and the 38.50-70 stands as the next short term target. The metal is expected to regain its $49 high before end of this summer.
Ashraf