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EUR/GBP Cross Reaching Critical Extension Levels
10/07/2009 12:01 am EST
As shown on the EUR/GBP daily chart, after making a minor bearish correction in the current steep uptrend, the euro has begun to resume its dominating position over the British pound.
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(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)
Price is currently approaching the 0.9300 high (almost a six-month high) that was reached early last week with a clear shooting star candle.
After that high was reached, the minor bearish correction that followed bottomed out at a key 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the low on 9/11/2009 to the noted high on 9/28/2009).
In the event of a substantial breakout above the 0.9300 uptrend high, price could potentially shoot for further key resistance in the important 0.9500 price region. Current downside support within the context of the strong prevailing uptrend continues to reside in the key 0.9075 price region.
By James Chen, chief technical strategist, FX Solutions
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