Weekly
- Last Candlesticks pattern: N/A
- Time of formation: N/A
- Trend bias: Near term up
Daily
- Last Candlesticks pattern: Hammer
- Time of formation: 3 Feb 2016
- Trend bias: Up
EURGBP – 0.8677
As the single currency has continued edging higher after breaking resistance at 0.8646, adding credence to our view that low has been formed at 0.8403 and mild upside bias remains for the rise from there to extend further gain to 0.8705-10, above there would signal the fall from 0.8857 has ended, bring headway to 0.8740-45, however, near term overbought condition should prevent sharp move beyond 0.8770 and price should falter below 0.8810-15, risk from there has increased for a retreat to take place later.
On the downside, expect pullback to be limited to 0.8585-90 and the Tenkan-Sen (now at 0.8559) should contain weakness, bring another rise later. A daily close below the Kijun-Sen (now at 0.8549) would defer and suggest first leg of rise from 0.8403 has ended, bring weakness to 0.8500-05 but only a drop below this level would abort our bullishness and bring further fall to 0.8460-65, however, price should stay well above said support at 0.8403, bring another rebound later.
Recommendation: Buy at 0.8585 for 0.8750 with stop below 0.8500.
On the weekly chart, as euro has rebounded after finding support at 0.8403 late last month, suggesting the retreat from 0.8857 has ended at 0.8403 and consolidation with mild upside bias is seen for gain to 0.8705-10, then 0.8740-45, however, reckon upside would be limited to 0.8800 and price should falter well below resistance at 0.8857, bring further choppy trading later. Only a break of said resistance at 0.8857 would revive bullishness and extend the rise from 0.8304 to 0.8940 (50% Fibonacci retracement of 0.9576-0.8304 and current level of the Kijun-Sen) but price should falter below resistance at 0.9026.
On the downside, whilst pullback to 0.8520-25 cannot be ruled out, reckon 0.8495-00 would limit downside and bring another rebound. Below 0.8460-65 would bring retest of 0.8403 but break there is needed to revive bearishness and extend the fall from 0.8857 to 0.8350-55. Looking ahead, below there would signal decline from 0.9576 top has resumed for retest of 0.8304 but only break there would extend the fall from 0.9576 top for retracement of medium term upmove to previous support at 0.8251, then 0.8200.
