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 – 0.8511
Despite falling to 0.8403 last week, the subsequent rebound suggests a temporary low has possibly been formed there and consolidation with mild upside bias is seen for test of resistance at 0.8592, however, a daily close above there is needed to signal the fall from 0.8857 has ended at 0.8403, bring retracement of this fall towards another previous resistance at 0.8646, however, reckon upside would be limited to 0.8680-85 (61.8% Fibonacci retracement of 0.8857-0.8403) and price should falter below 0.8705-10, bring retreat later.
On the downside, expect pullback to be limited to the Kijun-Sen (now at 0.8525) and the Tenkan-Sen (now at 0.8498) should hold, bring another rise later. Below 0.8460-65 would suggest the rebound from 0.8403 has ended instead and bring another test of said support, once this level is penetrated, this would revive bearishness and extend recent decline from 0.8857 to 0.8385-90, break there would confirm the rebound from 0.8304 has ended and subsequent weakness to 0.8350 would follow, having said that, previous support at 0.8304 should remain intact, risk from there has increased for a rebound to take place later.
Recommendation: Stand aside for this week.
On the weekly chart, as euro found good support at 0.8403 last week and has recovered, suggesting consolidation above this level would be seen and test of the Tenkan-Sen (now at 0.8630) is likely, however, break of resistance at 0.8646 is needed to signal the retreat from 0.8857 has ended, bring further gain to 0.8660-65, then 0.8705-10. Having said that, only break of latter level would suggest another leg of rebound from 0.8304 is underway for test of 0.8800, then towards resistance at 0.8857, break there would 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.
