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EUR/GBP leads the EURO lower

Posted by Marge Maresca on Sep 26, 2017 3:24:04 PM


EUR/GBP risks deeper fall below key Fibo support
EUR/GBP is closing in on key Fibo support at 0.8694. This is the 61.8% Fibo of the April to August 0.8315 to 0.9307 rise where a break opens the way for a full retracement to April's 0.8315 base. The weekly Ichi cloud also holds some significance close to that Fibo. The cloud top is at 0.8638 and a break risks a further slide to the base of the pattern at 0.8484. The cross has not traded below the weekly cloud since December 2015 and a move under there would be significant for those playing the short side. Closer to market are the July 0.8744/45 double lows. September's previous 0.8775 base gave way this morning in Europe and the cross made a fresh 10-week low at 0.8755. A test of those July lows looks imminent. The bearish structure on the charts is expected to remain while the falling 10-DMA at 0.8846 caps the market. Chart 1) 2)

GBP/JPY bulls stymied by UK's May and Moody's
GBP/JPY suffered a double whammy on Friday which may be difficult to recover from and points to deeper losses through 149.65 -- 23.6% retrace of the 139.30 to 152.85 (August to September) rise. A daily close below 149.65 will unlock 147.65 --38.2% of the same 139.30 to 152.85 gain. UK PM May's much-anticipated Brexit speech was met with mild disappointment by sterling traders which was compounded by the late downgrade of the UK by Moody's to Aa2 from Aa1. Continued uncertainty surrounding the Brexit negotiations means the pound is likely to suffer disproportionately against the yen. Thursday and Friday GBP/JPY candlestick lines formed a bearish engulfing pattern, consisting of a white candlestick body on Thursday which was subsequently contained within Friday's large black candlestick body. This is normally a sign of a significant bearish reversal when seen in an uptrend. Only a break and daily close above Thursday's high will shift the overall bias back to the upside.


Topics: US FX Market Open


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