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 – 0.8583
The single currency found decent demand at 0.8384 last week and has rallied, reinforcing our bullish view that another leg of corrective rise from 0.8312 low is underway, our long position entered at 0.8400 met indicated upside target at 0.8600 with 200 points profit, this anticipated rise suggests the rebound from 0.8312 is still in progress, hence bullishness remains for this move to bring retracement of recent decline towards 0.8660-65, however, near term overbought condition should prevent sharp move beyond 0.8700 and price should falter below previous resistance at 0.8735, bring retreat later.
On the downside, whilst initial pullback to 0.8540-50 cannot be ruled out, reckon the Tenkan-Sen (now at 0.8500) would limit downside and bring another rise later to aforesaid upside targets. Below the Tenkan-Sen would risk test of the Kijun-Sen (now at 0.8464) and but only a daily close below support at 0.8457 would abort and signal top is formed instead, bring further fall to 0.8400-10 and then test of said support at 0.8384. Looking ahead, only a drop below 0.8384 would shift risk back to downside and suggest the rise from 0.8312 has ended, bring eventual retest of this level later.Â
Recommendation: Long entered at 0.8400 met target at 0.8600 with 200 points profit and would buy again at 0.8520 for 0.8700 with stop below 0.8420.
On the weekly chart, as the single currency found good support at 0.8384 and has rebounded, a hammer candlestick bullish pattern was formed, retaining our bullish view for the rebound from 0.8312 to bring retracement of recent decline, hence further gain to 0.8675-80 and then 0.8700-10, however, as broad outlook remains consolidative, reckon upside would be limited to 0.8750 and 0.8788 resistance should remain intact, bring retreat later.
On the downside, although initial pullback to 0.8560-70 cannot be ruled out, reckon the Tenkan-Sen (now at 0.8524) would limit downside and bring another rise later. A drop below this week’s low at 0.8457 would abort and suggest top is possibly formed, risk weakness to 0.8400-10 but only break of said support at 0.8384 would suggest the rebound from 0.8312 has ended instead, bring further fall to 0.8350-55 and eventually retest of 0.8312.
