Best Financial Markets Analysis Article A short term bull signal seen earlier this year has essentially been negated now, following a deep pullback. Latest weakness has turned focus on key supports, and increases speculation that the EUR/GBP cross could be topping out.

The FX Trader’s view

MONTHLY CHART:

So far, the long term 38.2% retracement has proved supportive, but failure to move decisively away from this threatens to put it under pressure once more

A break below here and the Jun-09 low near 0.8400 would favour medium term bears.

DAILY CHART:

After clear failure at resistance near 0.9150 the subsequent deep pullback recently found support from a 76.4% level. Bulls needed (and still need) a recovery back through the old return line around 0.8900 to see downside risk start to fade.

But 76.4% support has given way now, exposing the 0.8593 Jan low (itself near to a longer term 76.4% level).

A degree of support is likely here, but later failure would then see little in the way of a return to the Jun-09 low – further downside targets would also be explored in future editions of the FX Specialist Guide (e.g., the first interesting Fibo projection would come in around 0.8300).

Mark Sturdy
John Lewis

Seven Days Ahead
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