EURGBP continues to trade lower
EURGBP Continues To Trade Lower
Since it broke out of its rising channel in July, EURGBP has continued to sell off pushing even lower below the channel breakout target indicated our July analysis (chart reproduced here for clarity).At the close of last week, this cross breached its rising trendline(red)originating in 2000 and also another 13 months rising trendline(blue) established in Jun’05.Last week marked its third week of lower closes since its sell off began in early June and Monday and Tuesday saw further price losses to as low as 0.6720.
Figure 1: Daily Chart
Figure 2: Weekly Chart
How strong are the bears? Let’s look at our charts for some clues. After losing two important long-term rising trendlines in a week to the bears, the bulls have given up for now and allowed the bears to savour their reward of success. In addition, EURGBP has also taken out its May’06 low, another sign of bears’ strength. Supporting the above view also are the momentum indicators on the monthly and weekly charts, which have turned bearish suggesting that more downside is expected. Although an oversold condition is in place on the daily chart, such condition might not produce a meaning bounce as the situations on the weekly and monthly charts suggest lower prices.EURGBP now looks set to test its Nov’05 low at 0.6706.It might be a little too early to say but a break of this level should force a retest of the Jun’05 low at 0.6609.Conversely, if any corrective bounce materialize, the broken rising trendline should hold as support.
Figure 3: Monthly Chart
On the whole, as long as EURGBP remains below its broken trendlines and major emas,the medium term trend is down and more price losses are likely.
Happy Trading
Mohammed Isah is a private trader and an independent technical analyst. He initially traded stocks and now primarily focuses on forex. He produces Weekly, Mid-Week and Friday forex technical research which is available at
www.tradingmarkets.com/fxtechnicalresearch. He also has a Daily, Weekly and Monthly pivot points reports. You can contact Mohammed on his pivot points reports and other enquiries at:
isahmo@gmail.com