EUR/GBP Bear Trend Looking To Accelerate

The EUR/GBP hasn’t been this low since this time last year in May 2009. And as such, I had to go to the weekly chart to find the next level of support: 0.8450 then 0.8400.

Also on the weekly chart is a descending triangle with 0.8400 the base of the triangle. Meaning a break below this level will bring a reversal to the bull rally the euro has staged versus the British pound since September 2008 and change this LT up trend. Since making a low at 0.7700, the euro rallied over 2,100 pips to a high of 0.9802. The fundamentals, however, have taken a very bearish turn with a smattering of European countries on the verge a implosion quite possible because of the euro. Though the UK has the same debt issues that Greece (and Japan and the US) have, it sits in a very enviable position of controlling its own monetary policy in order to control that debt, if necessary. Without that mechanism, EU countries will be in a very tough position dealing with its and its neighbors’ sovereign debt issues brought about by this financial crisis.

With the EUR/GBP below the large quarter point at 0.8500, I am watching if the pair will sink to the 0.8450/00 support level and how the pair behaves once at 0.8400 support level. If price breaks below this MT support level, there is no support until 0.8241 as the next level of support on the weekly chart. Trade what you see though, not what I think.