Weekly
• Last Candlesticks pattern: N/A
• ime of formation: N/A
• Trend bias: Near term up
Daily
• Last Candlesticks pattern: Hammer
• Time of formation: 3 Feb 2016
• Trend bias: Up
EURGBP – 0.8643
Although the single currency did rebound after finding support at 0.8605 as suggested, as euro ran into resistance at 0.8735 yesterday and has retreated quite sharply, deferring our bullishness and further consolidation would take place, however, still reckon downside would be limited to 0.8605 (said support and current level of the Kijun-Sen), bring another rise later, above said resistance at 0.8735 would signal pullback from 0.8788 has ended, bring retest of this level. Looking ahead, break there would extend rise from 0.8403 to 0.8810-15 but as broad outlook remains consolidative, reckon upside would be limited to previous resistance at 0.8857, risk from there is seen for a retreat to take place later. Only break of said resistance at 0.8857 would signal the rise from 0.8304 low is underway for headway to 0.8900, then towards 0.8940 (50% Fibonacci retracement of 0.9576-0.8304) which is likely to hold from here.
On the downside, whilst marginal weakness from here cannot be ruled out, reckon the Kijun-Sen (now at 0.8605) would contain downside and bring another rise later. A daily close below the Kijun-Sen would signal top is formed and bring weakness to 0.8550-55 and then test of the lower Kumo (now at 0.8527) but break of 0.8505-10 is needed to signal the rebound from 0.8403 has ended, bring subsequent fall to 0.8460-65, however, price should stay well above said support at 0.8403 and bring another rebound later.
Recommendation: Hold long entered at 0.8605 for 0.8785 with stop below 0.8505.
On the weekly chart, as the single currency has remained confined within recent established range, retaining our view that initial consolidation below indicated resistance at 0.8788 would be seen and pullback to the Tenkan-Sen (now at 0.8596) cannot be ruled out, however, reckon downside would be limited to 0.8580 and bring another rise later. Above said resistance at 0.8788 would extend the rebound from 0.8403 towards said resistance at 0.8857. Looking ahead, only a break of this level 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, expect pullback to be limited and 0.8595-00 should hold, bring another rebound. Below 0.8550 would defer and risk weakness to 0.8520 but reckon 0.8495-00 would contain downside. 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.
