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
The single currency ran into heavy offers at 0.8735 last week and has dropped sharply dampening our near term bullishness and suggest top has been formed at 0.8788 earlier last month, hence consolidation with mild downside bias is seen, break of last week’s low at 0.8485 would extend the fall from 0.8788 to 0.8445-50, however, reckon previous support at 0.8403 would hold on first testing due to near term oversold condition and price should stay well above support at 0.8332, risk from there is seen for a rebound later.
On the upside, whilst initial recovery to the Tenkan-Sen (now at 0.8610) cannot be ruled out, reckon the Kijun-Sen (now at 0.8637) would limit upside and bring another decline later. Above 0.8690-00 would bring another test of 0.8735 resistance but only break there would revive bullishness and signal the rise from 0.8403 is still in progress, bring further gain 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.
Recommendation: Stand aside for this week.
On the weekly chart, last week’s retreat formed a black candlestick, suggesting the rebound from 0.8403 has ended at 0.8788 last month, hence consolidation with mild downside bias is seen for further weakness to 0.8495-00, however, reckon 0.8460 would limit downside and said support at 0.8403 should hold, bring further sideways trading, Only a break of this support would 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.
On the upside, expect recovery to be limited to 0.8610-15 and the Kijun-Sen (now at 0.8723) should hold, bring another decline later. Only a break of resistance at 0.8735 would risk test of said resistance at 0.8788 which is likely to cap euro’s upside. In the event the single currency is able to penetrate said resistance at 0.8788, this 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.
