Remember my past week post about this pair? you can see it here: http://blogs.fxstreet.com/advisor/tag/eurgbp/ the pair again rebounded in the 61.8% of the Fibo rally, and 0.8840 zone is holding the downside pretty well and in fact, the pair formed a double bottom there with a neck at 0.9130 (seems to be a figure day today ). A confirmation above that point, could mean a nearly 300 pips rally, with a tough resistance in the middle: 0.9205 the 38.2% of the rally.

I was following the longer term perspective in the pair, so I will share with you this daily chart: December rally has already corrected the  61.8% (still doubt of Fibonacci? We really need to believe in it, as at this point I consider it more a “faith” than anything else: how could it be, a number present in human body shape, and flowers petals and rabbits reproduction? amazing really, I should do a larger post about our Fibo friend), and the pair is tending to the upside again. As long as the 0.9000 zone holds, probable target to the upside will be @ 0.9200 the 38.2% of the rally. above it, the pair will regain the bullish momentum and is likely a retest of the highs in 0.9800. On the other  hand, if the pair gives up the 61.8% @ 0.8840, we will a see pretty bearish rally from there. Finally monthly charts remain way over bough, but with this intra month correction, we need to see what February could bring. In weekly and daily charts, the O/B has been cleared, and the pair still has room to the upside.

Just a quick look to this pair: close to historical maximums, the pair is slightly  bearish in 4 hours charts, and also has a tough resistance @ 0.8670. Tuning to 30 minutes, we have kind of a descendant channel, with the roof also @ that zone. Maybe if reached, we have a good short term bearish opportunity, as next resistance is very close above 0.8686, meaning we have a good tight stop, and chances to see the pair approaching to 0.8630 or so, meaning the risk reward ratio favour us.

While Euro remains quite flat, Gbp is gaining some (temporarily for me) ground, so this pair continues correcting to the downside after the historical maximum: the pair continues unable to rise above the 38.2% of the Fibonacci rally of the last upleg, and attempting to test the 61.8% that could be a key level for further moves: under 0.8338, the pair has practically no support until the 0.8260 zone, of intermediate strength, yet more strong and important will be the 0.8200: under this last, the pair could begging a more important downside movement, with a first objective in the zone @ 0.8145. Resistances will be the 0.8400/10 zone (also a descendant trend line, and above this, the pair could regain ground to the key 0.8460/70 level; again above this level, the pair will find next resistances at 0.8514/20, followed by 0.8552 and finally the zone @ 0.8586, above which, the historical maximum could be retested, denying further corrections in the short term.

After yesterday post, the pair reached in next candle the proposed first target in the zone @ 0.8400/10, yet remained under the 38.2% and continue moving slowly to the downside. Remember this is a quite slowmo pair, with some intraday exceptions. Today, and after almost reached the 6.8% of the Fibonacci rally, the  pair recover the upside, and with indicators turning downside up, actual movement could easily extend first, to the zone @ 0.8470 above which the pair could return to 0.8514/20, followed by 0.8552 and finally the zone @ 0.8586. Supports also remain as yesterday at 0.8400/10, 0.8375 and finally 0.8340; yet considering that the 61.8% hasn´t been broken, we could consider yesterday’s movement a correction, that precede a trend continuation: watch up for next level to be broken and signal so.

Things are changing and while Gbp (against Usd dollar) is attempting to break higher, the Euro remains under selling pressure, and clearly seen in the Eur/Gbp. Last week the pair reached the proposed level @ the 138.2% of an inverted Fibonacci, and being highly over bought, begin a correction that right now, seems ready to continue to the downside: in 4 hours charts, the pair is under the 38.2% of this last 2 days upside run. with a first support  0.8437, under that level the correction could extend first to 0.8400/10, with next supports at 0.8375 and finally 0.8340, close to the 61.8% of the mentioned rally. If the pair reaches that level, we will have to wait and see if the dominant ascendant trend will be enough to provide a bullish rebound, or if a clear breakthrough will preannounce further falls. If actual candle fails to the downside and manage to close above the 0.8470 level, we could see the pair regain the uptrend, and continue first to 0.8514/20, followed by 0.8552 and finally the zone @ 0.8586.

Why I choose to talk about this pair today? Because Gbp is probably the weaker currency these days, and is falling against all other majors, including the Euro, although both pair usually move the same way. I was commenting the pair was  clearly bullish, but with a resistance @ 0.8450/75, and here we are, with the pair fighting that zone of monthly maximums back to 1995/96 when the Euro was not the Euro, just a basket of currencies, meaning we have an all time high in the pair, since Euro begin to circulate back in 2002. Is the pair over bought? no doubts. Can we see some falls? just corrections! from a technical perspective, the pair remains bullish in daily and weekly time frames, and while the Euro seems ready for an upside correction, Gbp is unable to find a bottom. From actual price, we could see the pair correcting a bit to downside, only to take aims to continue to 0.8580 first, and then to the 0.8670 zone, mentioned earlier today.

The pair reached 0.8458 and quickly fall to 0.8415 giving the proposed 30 pips in less than 30 minutes. With no much historical references at this levels, I guess is time to wait for next chance at actual price. Give the pair a couple of short term candles to decide a new trade. Not clear right now, yet under 0.8400 maybe we could have some more shorting chances.

Some time ago, I was looking at this particular pair in the long term managing the possibility of a downside break. The proposed levels that should have been broken, in fact offer strong rebounds, and the pair is way above the maximums zone and remains close to 0.8400. Looking at monthly charts, looking for a probable target, I found an interesting resistance zone between 0.8450/75 yet a more likely target to the upside, and strong resistance will be the 138.2% of an inverted Fibonacci rally that you can see in the chart, @ 0.8670 Anyway, indicators are close to overbought extremes fut not giving any sign of correction.  

Daily charts indicators are also overbought yet still pointing high. If you like short term trades, I believe the pair should offer some 30 pips rebound if reaches quickly in the next hours, the congestion zone  0.8460 mentioned above.

The Eur/Gbp is usually consider a “slow” pair, because it generally moves a very short number of pips a day, and if Euro and Gbp have the same trend against the rest of the currencies, well this pair becomes kind of flat; also, is the one with the highest pip cost, and the highest spread in trading platforms (there could be some strange exception to this, yet we are talking about most common majors and brokers). This conditions made the pair discardable for intraday trading but more interesting for long term trades, if you have the patient and the capital to hold positions without disturbing your trading. If you take a look at the following daily chart, you will see the pair has traded in a 350/400 pips range since past April between 0.7800 and an historical maximum (since Euro becomes the Euro) @ 0.8186. Daily charts are also saying the pair is turning bearish, yet to see some movement in the pair, we will have to wait those strange days where Euro and Gbp move in opposite directions or even have different speeds. Daily charts is also showing important support zones  @ 0.7730 and 0.7690, where you can see a congestion maximum zones last year, and also this year low for the pair. See that in daily charts the distance  between both supports is just of 40/50 pips. So under 0.7690, we will probably find a good confirmation for a bearish continuation of the pair. First important resistance on the other hand, is between 0.7830/50, followed by 0.7925  that should remain unbroken to consider the bearish long term continuation.

Turning to weekly charts, we could add Fibonacci levels to set objetives to the movement: the 38.2% of the last upleg starting on July 2007, is around 0.7610. A confirmation under that level, could send the pair to next important weekly levels at 0.7490 and 0.7380, tough congestion zone. The further I can see today the pair, is at 0.7269, the 61.8% zone if the mentioned rally.