Forecasting Next Moves for EUR/GBP Currency Pair
04/24/2009 10:52 am EST
(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)
After forming a tentative bottom just under 0.8800, price action on EUR/GBP, a daily chart of which is shown, made a bounce and is currently consolidating between key support/resistance levels.
This important cross has been relatively reliable in making strong, unidirectional breaks after consolidations. To the downside, the noted support just under 0.8800 serves as the bottom of the consolidation, while the psychologically important support/resistance region around 0.9000 should serve as the top of the consolidation.
Any break to the downside below 0.8800, which would continue the breakdown of the long-term uptrend support line that occurred earlier this month, should easily target further support around the key 0.8650 price region.
Any upside break above 0.9000 should reach for immediate targets around the 0.9100 support/resistance region, and then the underside of the mentioned long-term uptrend line.
By James Chen, Chief Technical Analyst, FX Solutions