EUR/GBP Pair: Daily and Monthly Pictures

There is a need to look at both the pictures in the same time to better understand what is happening in this pair.

From the break up over the triangle upper boundary, in mid 2007 (1), the pair is going up in a straight line in the monthly chart. The move was so strong that it was not forcefully repelled when it reached the last top (2), which is usually a resistance.

The only minor action was the two small reversals (3) in the daily chart, but the price succeeded in the third time to overcome this obstacle and move forward.

Here are the main points in interests right now:

1. The breakup over the 0.725-30 area is implying a move to 0.73 + 0.07 = 0.8. There is a need for a definitive break and consolidation over the line and we don't have that yet.
2. If we zoom into the daily chart, a small retest over the important monthly break could be in the cards before we see a real consolidation and continuation up.
3. This retest can bring the pair near the 0.722 area where we can find the previous resistance which is now a support, the 50% Fibonacci retracement level and the rising 20 DMA (middle Bollinger).
4. All these TA items together create the one thing that we like the most in our work, which is a "combination" of elements. We like it because it is normally proving us right in our assumptions. In this case, the end of the small corrective phase.
5. In case it will not be enough, the next target for the correction would be the lower boundary of the channel in combination with the 61.8%. This case is not our preferred scenario because it would imply a re-entry under the 0.725 level and the re-assessment of the important monthly bullish move.

Disclaimer

By no means do any part of this article recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this article. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this article was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.
We always welcome feedbacks: This email address is being protected from spam bots, you need Javascript enabled to view it

About the Author

Moshe Shalom Head of Technical Analysis Department ForexManage Ltd Site: www.forexmanage.com Email: This email address is being protected from spam bots, you need Javascript enabled to view it