Is Bear Risk In Euro/Sterling Growing ?
09 April 2009
We had been wondering whether the Feb/Mar rally in EUR/GBP was a temporary/corrective affair, precursing another move to the downside. Certain s/term bear signs have been seen, keeping the scales skewed in the bears’ favour.
MONTHLY CHART: The surge in this cross rate failed to reach the topical parity level. We see the 0.8555 38.2% retracement as a key level now – if this fails then the long term chart structure would not favour the bulls.
DAILY CHART: The recent recovery was thwarted by the key 0.9519/28 area, 26-Jan high and 76.4% rebound level. We had been thinking that this was just a corrective bounce ahead of another notable downleg –and recent breach of the small bull channel base projection (and 0.9072 12-Feb high) supports this view. Further confirmation of this would come after a failure of the small 0.8837 76.4% pullback level. Of course, a recovery and close above 0.9519/28 would be a clear bull sign now. In the FX Trading Guide we have adopted a fresh bear stance now, particularly while key 0.9519/28 stays intact.
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