The EUR/GBP bulls have attacked with a force similar to Alexander the Great or Genghis Khan and his famous Mongol horse charges one is wondering if prisoners are being taken or simply scorched in the process. Granted, the prospects for a stronger EUR against the GBP seems likely for a while, but technically the pair has just crossed a Rubicon of a barrier in .9075. One has to wonder what the next target is?
Consider this, the pair has climbed roughly 730 pips in < 2 months. This aberrant behavior has annihilated almost any form of resistance along the way with dips having a yogurt-like shelf life experiencing nothing more than 3 down days in a row and nothing more than an 80 pip dip. This communicates buyers are coming in fast and looking for any cheaper price to get into this impressive move.
Taking a look at the chart below, we can see how once the pair cleared the gravity of the Ichimoku Cloud on the daily chart, its has not one single breach below the 20 ema and used it as a Apollo like launching pad to mount its next upside attack. Furthermore, the pair only had a brief pit-stop at the 38.2% fib of the 9500-8400 down move and didn’t even bother to stop and take pictures at the 50% fib. The 61.8% appeared interesting from a brief sight-seeing perspective but proved nothing more than a small tourist stop on the way.
Eventual destination? We suspect there really is nothing left for the pair to mount a significant challenge except the full retracement of the move back at 9500. It’s tidy, neat and makes sense (something the markets do not do often) but with the overall EUR prospects faring better than the GBP, along with its merciless price-action ascent and Carl Lewis long jumping performance past resistance levels, we suspect the 95 pence level will be under attack within the next week or two and we will continue to add on positions as long as 8830 (former major top) holds.
Chris Capre is the current Fund Manager for White Knight Investments (www.whiteknightfxi.com/index.html). He specializes in the technical aspects of trading particularly using Ichimoku, Momentum, Bollinger Band, Pivot and Price Action models to trade the markets. He is considered to be at the cutting edge of Technical Analysis and is well regarded for his Ichimoku Analysis, along with building trading systems and Risk Reduction in trading applications. For more information about his services or his company, visit www.2ndskies.com.