EUR/GBP Cracks the 0.8410 low and the 0.84 handle; Momentum Shifting

by Admin

Awards 2013

EUR/GBP Daily chart 9:56AM EDT 4/26/2013

EURGBP

New low: The EUR/GBP has been bearish since finding resistance at 0.8814, which is now the 2013 high. It has been more or less in a sideways consolidation, but some bearish bias is developing as the latest down swing from the 0.8636 pivot has pushed for a new low since consolidation, cracking the 0.8410 low and the 0.84 handle. A break here also breaks down the 38.2% retracement of the 0.7755 to 0.8814 bull run.

Momentum: The 4H daily RSI is falling below 40, which shows a loss of bullish momentum that was established during the rally since July 2012 from the 0.7755 low.

Rising trendline, 50% retracement: From the 0.7755 low, you can connect the lows to extend a rising trendline support. If the current decline extends, the first area we can expect support is around this rising trendline, which at the moment is in confluence with the 50% retracement at 0.8285. Looking at the technical picture, we should probably limit our bearish outlook to 0.8285-0.83. But if the ECB does cut rate by 25 bps next week, the market might push lower, next target being 61.8% retracement at 0.8160.