A medium term bear signal in the EUR/GBP cross was given in the first half of 2010, with subsequent recovery finding good technical resistance last October. Renewed weakness now looks like the resumption of the main downtrend.

The FX Specialist view

MONTHLY CHART

Prior breaks of support signalled a medium term bear move was underway.

Recovery from the 50% pullback level found clear resistance from the old triangle.

Below the 0.8065 Jun-10 low next focus would be on potential 0.7783 61.8% support.

DAILY CHART:

The Dec bounce failed around the 0.8649 01-Nov low and close to the underside of the old bull channel.

S/term support at the 76.4% pullback is not a surprise, but this should presently give way to open up a test of the Jun-10 low. Any near term bounce is not expected to be deep.

We will look at lower targets in the FX Specialist Guide in due course.

Mark Sturdy
John Lewis

Seven Days Ahead
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