EUR/GBP: Focus Remains On The Downside
3cAnalysis | Apr 30, 2014 07:21
Although EUR/GBP traded to our 1st upside target yesterday, gains above the 13 day moving average proved limited. The resulting reversal of sentiment proved the relevance of that average, on a closing basis, with yesterday's selling pressure taking prices through an important Marabuzo line and a 76% correction to this year’s upside.
Although intra-day sentiment is now oversold, providing potential for profit taking, the focus remains on the downside. So our call is Bearish but to leave room to Sell a Rally to 0.8221. The risk is 0.8241, yesterday's open, with an immediate target of 0.8191, the 9 week base, then 0.8174 and 0.8158, Feb’s low point.
The risk beyond 0.8241 is to yesterday's 0.8259 high point.
Monday’s recovery from close to 171.15, a 50% pull-back to April’s gains, left Tuesday’s signals for GBP/JPY pointing higher. These were confirmed with a gain of ¾ Big Fig, an improvement which has taken sentiment towards this month’s 173.16 high and close to the over 5 year tops which were posted in March & January at 173.59 & 174.86.
However, the rally has attracted profit taking selling in Asia this morning and with a small sequence of higher daily lows being ended, signals for Wednesday are pointing cautiously lower. With this in mind, the outlook is to sell on the open and at 172.60, with a stop loss at 173.16, April’s top.
Although Monday’s DAX recovery was modest and failed to end a sequence of lower daily highs, the fact that it had come from close to the 50 & 100 day average rates, left Tuesday’s signals pointing higher. These were confirmed with a gain of almost 150 Pts, a rally which has ended the trend of lower tops.
But it may still be corrective, as prices remain below developing daily and weekly bear trends. In fact, weakness into last night’s close, from ahead of the daily bear trend, leaves a cautious and temporarily bearish bias to signals.
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So, with this in mind, the outlook for Wednesday is to sell on the open and at 9625.0, with a stop loss at 9665.0, last week’s high. Targets are to 9553.5, 9510.0, but to probably no further than to 9480.5, the window which has remained open since Monday’s close.
Targets are to 171.90, 171.50 and then 171.26, this week’s low trade.
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