EUR/GBP Weekly Outlook

EUR/GBP failed below 0.9137 again and dropped sharply to as low as 0.8914 last week. The cross drew support from 55 days EMA and rebounded strongly. Such development mixed up the outlook. Also, considering that EUR/GBP is close to medium term falling trend line (now at 0.9202), we'll stay neutral for the moment. On the upside, break of 0.9137 will suggest that rise from 0.8601 is still in progress and has resumed and should target 0.9410 resistance next. On the downside, however, break of 0.8914 will re-affirm the case that rise from 0.8601 has completed and deeper fall should be seen towards 0.8601/62 support zone instead.

In the bigger picture, EUR/GBP is still bounded inside medium term converging range between 08399 and 0.9799. The question remains on whether consolidation from 0.9799 has completed with three waves to 0.8601, or it's developing into five wave triangle pattern with fall from 0.9137 as the fifth wave. In either case, in case of another fall, downside should be contained above 0.8601 support and finally bring long term up trend resumption. On the upside, break of 0.9410 resistance will indicate that the consolidation from 0.9799 has completed and long term up trend is resuming for another high above 0.9799.

In the long term picture, current development suggests correction from 0.9799 is still in progress and the long term up trend from 2000 low of 0.5680 is not ready to resume yet. Nevertheless, correction from 0.9799 is expected to be contained by 0.7963/0.8186 support zone and bring up trend resumption. Rise from 0.5680 is still expected to continue to 261.8% projection of 0.5680 to 0.7258 from 0.6535 at 1.0666 eventually.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box