EURGBP Candlesticks and Ichimoku Analysis

The single currency did resume recent decline from 0.9805 top and dropped to a fresh 2009 low of 0.8400, price finally broke below the Ichimoku cloud on the weekly chart, suggesting euro would continue to remain under pressure and bring correction of medium term upmove towards 0.8323 (approx. 100% projection of 0.9805 to 0.8637 measuring from 0.9491), however support at 0.8225 should limit downside and 0.8171, being the 50% Fibonacci retracement of medium term rise from 0.6536 to 0.9805) is expected to remain intact and euro shall stage a rebound from there.

On the upside, whilst it is quite possible to see a recovery back to the Ichimoku cloud bottom (now at 0.8597), euro's upside should be limited to 0.8637 (previous support turned resistance) and renewed selling shall emerge below the Tenkan-Sen (now at 0.8719). Only above the Ichimoku cloud top (now at 0.8785) would dampen this bearish view and signal a low has been formed at 0.8400.

On the daily chart, the 'hammer' candlestick pattern formed at last week's low at 0.8400 suggests further consolidation above this level would take place and although recovery to 0.8600/05 cannot be ruled out, upside should be limited to the Kijun-Sen (now at 0.8634) and bring another decline later. Break of 0.8400 support would extend recent decline to 0.8350, then 0.8323 (100% projection of 0.9805 to 0.8637 measuring from 0.9491), however, euro shall stay well above previous chart support at 0.8225.

On the upside, as further consolidation above 0.8400 is expected, recovery to 0.8550/60 cannot be ruled out, upside should be limited and bring another selloff to abovementioned downside targets. Only above the Kijun-Sen would signal a temporary low has been formed at 0.8400, then correction to 0.8689 (61.8% Fibonacci retracement of 0.8868 to 0.8400) would follow but 0.8740 (50% Fibonacci retracement of 0.9080 to 0.8400) should remain intact.