September 7, 2011
The EUR Is Unhinging No it’s not. But it makes for a great headline LOL. To be honest, I have been amazed at the resiliency of the euro. I thought for sure Greece would drive the EURUSD below 1.25 and the EURGBP below 0.80. But that thought is 2 years ago and we find both currency pairs well above those levels. And while the SNB’s peg to the euro brought mass attention to the CHF, I did see one tweet that considered the other side of the trade.  The SNB has affectively propped up the EUR. If the SNB needs to devalue its currency, it will need to buy euros to do so. As such, the EUR has another agency willing to keep the currency intact. With the Chinese, the Swiss, and the Germans all with incentive to keep the single currency in existence and with the ammunition to do it, I don’t expect we will see the day of reckoning that many of us anticipated when reality of Greece reverberated through the markets. The EURGBP continues to remain bullish as price remains above 0.8750. The major area of resistance remains 0.8880. A return to this level will mark a 5th attempt. And I tell you, the odds of breakout above 0.8880 are very good. But until then, a EURGBP close above 0.8800 gives the pair a bullish bias. A close below 0.8750 changes the picture entirely. No Francs (The Economist) Another Reason to Buy Gold: Franc Losing Safety Status (CNBC) Will the SNB be successful in slowing the franc? (Daily Forex Trading Edge) Updated chart below:

The EUR Is Unhinging

No it’s not. But it makes for a great headline LOL. To be honest, I have been amazed at the resiliency of the euro. I thought for sure Greece would drive the EURUSD below 1.25 and the EURGBP below 0.80. But that thought is 2 years ago and we find both currency pairs well above those levels. And while the SNB’s peg to the euro brought mass attention to the CHF, I did see one tweet that considered the other side of the trade. 

The SNB has affectively propped up the EUR. If the SNB needs to devalue its currency, it will need to buy euros to do so. As such, the EUR has another agency willing to keep the currency intact. With the Chinese, the Swiss, and the Germans all with incentive to keep the single currency in existence and with the ammunition to do it, I don’t expect we will see the day of reckoning that many of us anticipated when reality of Greece reverberated through the markets.

The EURGBP continues to remain bullish as price remains above 0.8750. The major area of resistance remains 0.8880. A return to this level will mark a 5th attempt. And I tell you, the odds of breakout above 0.8880 are very good. But until then, a EURGBP close above 0.8800 gives the pair a bullish bias. A close below 0.8750 changes the picture entirely.

Updated chart below:

EURGBP daily chart Sept 7 2011

2:10am  |   URL: http://fmfx.tumblr.com/post/9912923077/eurgbp-bullish-still
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FILED UNDER: EURGBP 8hr chart technical analysis 
September 4, 2011
USD Weakness Is Still Very Real As many know, I really only view the USD through the lens of the GBPUSD. The USD has weakened versus GBP and regardless of the catalyst of a USD rally, cable continues to put in higher lows since the July 11th low at 1.5770. So while GBPUSD did put in a bearish week last week, the daily chart still remains bullish as the new trading week opens. The daily chart played out very technically as the August 24/25 lows broke below the 61.8% Fibonacci retracement levels (purple) of the rally from 1.6100 to 1.6618. A break of the 61.8% Fib usually signals a reversal. And that is what unfolded as the ensuing rally fizzled out and resulted in a new low at 1.6140 on Thursday of last week. There are a lot of bears out there on cable. And as long as price struggles above 1.6500, it is hard for the bears to go away. But the fundamentals continue to point to a LOWER US dollar. Economic data is deteriorating in the US after a decent first half of the year. The Federal Reserve has confirmed the worst is indeed coming back in the form of QE3. As the year ends, I think we will see worsening economic numbers as the consumer spending decreases in response to the slowdown in manufacturing and labor markets we have seen thus far. And while the UK economy doesn’t bode better, the Fed is much more dovish than the BoE. And for that reason, the fundamental picture favors GBP over the USD. Technically, I raise my eyebrows at the 3 bearish waves that were unable to break below 1.6100 level. This is a serious level of support and we have seen that candles that have closed above 1.61000 have led to sharp rallies back towards 1.6500. As the week opens, all eyes should be on 1.6250 to the upside and 1.6150 to the downside. These levels will dictate direction into the open especially with US markets closed Monday in observance of the Labor Day holiday. Over the week, however, the larger levels to pay attention to are 1.6100 if prices remain below 1.6250. If prices find support above 1.6250, the key level for further rallies remains 1.6500. Trade what you see! The Fed’s Plan - Rumors of News (Bruce Krasting) UK economic outlook darkens (The Financial Times)

USD Weakness Is Still Very Real

As many know, I really only view the USD through the lens of the GBPUSD. The USD has weakened versus GBP and regardless of the catalyst of a USD rally, cable continues to put in higher lows since the July 11th low at 1.5770. So while GBPUSD did put in a bearish week last week, the daily chart still remains bullish as the new trading week opens.

The daily chart played out very technically as the August 24/25 lows broke below the 61.8% Fibonacci retracement levels (purple) of the rally from 1.6100 to 1.6618. A break of the 61.8% Fib usually signals a reversal. And that is what unfolded as the ensuing rally fizzled out and resulted in a new low at 1.6140 on Thursday of last week.

There are a lot of bears out there on cable. And as long as price struggles above 1.6500, it is hard for the bears to go away. But the fundamentals continue to point to a LOWER US dollar. Economic data is deteriorating in the US after a decent first half of the year. The Federal Reserve has confirmed the worst is indeed coming back in the form of QE3. As the year ends, I think we will see worsening economic numbers as the consumer spending decreases in response to the slowdown in manufacturing and labor markets we have seen thus far. And while the UK economy doesn’t bode better, the Fed is much more dovish than the BoE. And for that reason, the fundamental picture favors GBP over the USD.

Technically, I raise my eyebrows at the 3 bearish waves that were unable to break below 1.6100 level. This is a serious level of support and we have seen that candles that have closed above 1.61000 have led to sharp rallies back towards 1.6500.

As the week opens, all eyes should be on 1.6250 to the upside and 1.6150 to the downside. These levels will dictate direction into the open especially with US markets closed Monday in observance of the Labor Day holiday. Over the week, however, the larger levels to pay attention to are 1.6100 if prices remain below 1.6250. If prices find support above 1.6250, the key level for further rallies remains 1.6500. Trade what you see!

11:34am  |   URL: http://fmfx.tumblr.com/post/9797856208/usd-weakness-is-still-very-real-as-many-know-i
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FILED UNDER: GBPUSD daily chart technical fundamental analysis 
August 30, 2011
EURGBP Starts The Week Toppish After a very bullish close to a very bullish week, EURGBP starts this new trading week looking weak. Attempts at 0.8880 have remained as before. Since Sunday evening, the 8hr chart continues to put in wicks that suggest weakness. A first target is the more aggressive 38.2% Fibonacci retracement level at 0.8810. A 2nd target is the 38.2% Fibonacci retracement level of the entire rally off the 0.8650 lows at 0.8790. After this consolidation, watch for continuation to the upside or more weakness. The key level will be 0.8750 to the downside and 0.8850 to the upside.

EURGBP Starts The Week Toppish

After a very bullish close to a very bullish week, EURGBP starts this new trading week looking weak. Attempts at 0.8880 have remained as before. Since Sunday evening, the 8hr chart continues to put in wicks that suggest weakness.

A first target is the more aggressive 38.2% Fibonacci retracement level at 0.8810. A 2nd target is the 38.2% Fibonacci retracement level of the entire rally off the 0.8650 lows at 0.8790.

After this consolidation, watch for continuation to the upside or more weakness. The key level will be 0.8750 to the downside and 0.8850 to the upside.

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FILED UNDER: EURGBP 8hr chart technical analysis 
August 26, 2011
EURGBP Week End Wrap The EURGBP has rallied for the last 2 trading weeks. But the trend gained considerable strength this week as the bulls targeted the short term resistance level at 0.8880. However, despite the momentum of this trend, I saw too many bears in my Twitter and StockTwits streams this morning. It seems the plan is to step in front of this train as it nears 0.8880 level where price has failed at this level 3 times prior. While seemingly logic, it actually isn’t. First off, follow the trend, especially a daily chart trend. This rally is a result of another failure at the 0.8650 level, a short term support level on the daily chart. A trend that has rallied over 200 pips shouldn’t be ignored. Plus, the failed low is a higher low - a subtle bullish hint. Secondly, when a currency pair looks to challenge a level more 2 or more times, it is usually a hint of an eventual breakout of that particular level. My mentor taught me that. Third, there is NOTHING bearish about this candle. What we need to watch for in the new trading week ahead is if the next candle puts in a wick like the 3 times before it. Remember that the European Central Bank President speak tomorrow when the markets are closed. With the European sovereign debt crisis in full swing, market participants will listen carefully as to whether or not Trichet chooses to finally acknowledge the crisis with monetary policy. The market will execute judgement on Sunday at the open. Enjoy the weekend!

EURGBP Week End Wrap

The EURGBP has rallied for the last 2 trading weeks. But the trend gained considerable strength this week as the bulls targeted the short term resistance level at 0.8880. However, despite the momentum of this trend, I saw too many bears in my Twitter and StockTwits streams this morning. It seems the plan is to step in front of this train as it nears 0.8880 level where price has failed at this level 3 times prior. While seemingly logic, it actually isn’t.

First off, follow the trend, especially a daily chart trend. This rally is a result of another failure at the 0.8650 level, a short term support level on the daily chart. A trend that has rallied over 200 pips shouldn’t be ignored. Plus, the failed low is a higher low - a subtle bullish hint.

Secondly, when a currency pair looks to challenge a level more 2 or more times, it is usually a hint of an eventual breakout of that particular level. My mentor taught me that.

Third, there is NOTHING bearish about this candle. What we need to watch for in the new trading week ahead is if the next candle puts in a wick like the 3 times before it.

Remember that the European Central Bank President speak tomorrow when the markets are closed. With the European sovereign debt crisis in full swing, market participants will listen carefully as to whether or not Trichet chooses to finally acknowledge the crisis with monetary policy. The market will execute judgement on Sunday at the open.

Enjoy the weekend!

1:14pm  |   URL: http://fmfx.tumblr.com/post/9424511231/eurgbp-bulls
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FILED UNDER: EURGBP daily chart analysis technical 
August 14, 2011
EURGBP New Week Outlook August 14 2011 The EURGBP also saw some wild moves last week as the market had to deal with the fact that now France as entered the European sovereign debt crisis discussion at the same time that Italy has become a serious concern in the market. Technically, however, the pair gave mixed signals as price made lows at 0.8640 rallied over 200 pips to 0.8880 and ended the week at 0.8750. The lows on Friday at 0.8730 gave a very small signal that EURGBP will head lower by piercing even the 78.6% Fibonacci level. Also, price closed the week below 0.8750 even if by only a few pips (0.8748 on my platform). Rallies to the 0.8880 highs continue to be met by sellers to target the green buy zone below 0.8700. However, the week closed before entering this green zone. Therefore, this pair continues to maintain is bearish bias into the 0.8600’s. Only a break and hold above 0.8880 changes this bias to bullish.

EURGBP New Week Outlook August 14 2011

The EURGBP also saw some wild moves last week as the market had to deal with the fact that now France as entered the European sovereign debt crisis discussion at the same time that Italy has become a serious concern in the market. Technically, however, the pair gave mixed signals as price made lows at 0.8640 rallied over 200 pips to 0.8880 and ended the week at 0.8750.

The lows on Friday at 0.8730 gave a very small signal that EURGBP will head lower by piercing even the 78.6% Fibonacci level. Also, price closed the week below 0.8750 even if by only a few pips (0.8748 on my platform). Rallies to the 0.8880 highs continue to be met by sellers to target the green buy zone below 0.8700. However, the week closed before entering this green zone. Therefore, this pair continues to maintain is bearish bias into the 0.8600’s. Only a break and hold above 0.8880 changes this bias to bullish.

12:47pm  |   URL: http://fmfx.tumblr.com/post/8917702937/eurgbp-still-bearish
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FILED UNDER: EURGBP daily chart technical analysis 
GBPUSD New Week Outlook August 14 2011 Though cable managed to close the week above the key 1.6250 level, the pair maintains a bearish bias as long as price holds below 1.6500. At the open, price has the bullish momentum to move into the red sell zone that is marked by the 50% and 61.8% Fibonacci retracement levels of last week’s move to the downside. The main target for bears will be the green buy zone. However, if price manages to break and hold below 1.6100 support then expect price to move to the 1.6000 major psychological level. From there, bears will have to prove themselves with a push towards the 1.5770 lows. This week sees plenty of key economic data out of the UK that could make or break sterling this week. UK CPI is released Tuesday followed by the Bank of England meeting minutes release on Wednesday. UK retail sales will be contrasted to the US retail sales report of last week. Since both economies are heavily reliant on the consumer, investors will looks to see which economy is stronger relative to one another. There is also a lot of economic news from the US this week but I expect that UK fundamentals will ultimately dictate direction for the GBPUSD currency pair. Trade what you see!

GBPUSD New Week Outlook August 14 2011

Though cable managed to close the week above the key 1.6250 level, the pair maintains a bearish bias as long as price holds below 1.6500. At the open, price has the bullish momentum to move into the red sell zone that is marked by the 50% and 61.8% Fibonacci retracement levels of last week’s move to the downside.

The main target for bears will be the green buy zone. However, if price manages to break and hold below 1.6100 support then expect price to move to the 1.6000 major psychological level. From there, bears will have to prove themselves with a push towards the 1.5770 lows.

This week sees plenty of key economic data out of the UK that could make or break sterling this week. UK CPI is released Tuesday followed by the Bank of England meeting minutes release on Wednesday. UK retail sales will be contrasted to the US retail sales report of last week. Since both economies are heavily reliant on the consumer, investors will looks to see which economy is stronger relative to one another. There is also a lot of economic news from the US this week but I expect that UK fundamentals will ultimately dictate direction for the GBPUSD currency pair. Trade what you see!

11:18am  |   URL: http://fmfx.tumblr.com/post/8914293356/gbpusd-remains-bearish
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FILED UNDER: GBPUSD 8hr chart technical analysis 
July 18, 2011
Cable Bears Take Early Lead Traders had to admit that another weekly close above 1.6000, despite the breakdown to 1.5770 midterm support, was bullish. However the failure at 1.62 hinted that bears were still around. The failure at 1.6150 became an early confirmation that shorts were indeed on the right side of the trade. Today’s break of 1.6050 was key. Today’s hold above 1.6000 is natural reaction to the major psychological level. So a bounce could happen back towards 1.6100. At this level, we watch if new shorts will show themselves for the bigger move towards 1.5750. 1.5950 is the first level of support to contend with. We’ve seen plenty of action there last week making this the week’s target to the downside. Momentum goes to the one who can break and hold. Bullish above, bearish below. News this week can rock this either way but today’s Monday action has yielded nicely for last week’s bears. 1.5950 is key to the downside going into Tuesday’s Bank of England meeting minutes release. The market is obviously biased bearish on the BoE considering the trend of the last 6 months. With FOMC out of the way, traders are free to put their attention back on the inaction of the BoE. Trade what you see.

Cable Bears Take Early Lead

Traders had to admit that another weekly close above 1.6000, despite the breakdown to 1.5770 midterm support, was bullish. However the failure at 1.62 hinted that bears were still around. The failure at 1.6150 became an early confirmation that shorts were indeed on the right side of the trade.

Today’s break of 1.6050 was key. Today’s hold above 1.6000 is natural reaction to the major psychological level. So a bounce could happen back towards 1.6100. At this level, we watch if new shorts will show themselves for the bigger move towards 1.5750. 1.5950 is the first level of support to contend with. We’ve seen plenty of action there last week making this the week’s target to the downside. Momentum goes to the one who can break and hold. Bullish above, bearish below. News this week can rock this either way but today’s Monday action has yielded nicely for last week’s bears.

1.5950 is key to the downside going into Tuesday’s Bank of England meeting minutes release. The market is obviously biased bearish on the BoE considering the trend of the last 6 months. With FOMC out of the way, traders are free to put their attention back on the inaction of the BoE. Trade what you see.

11:28am  |   URL: http://fmfx.tumblr.com/post/7768569790/gbpusd-bearish
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FILED UNDER: GBPUSD 4hr chart technical analysis 
July 17, 2011
Sellers Can Gain Momentum in EURGBP If price can hold below 0.8720, the first target is 0.8670. The real test for bears will be 0.8600, the 61.8% Fibonacci level of the entire 2011 EURGBP rally. Watch price action going into the week.

Sellers Can Gain Momentum in EURGBP

If price can hold below 0.8720, the first target is 0.8670. The real test for bears will be 0.8600, the 61.8% Fibonacci level of the entire 2011 EURGBP rally. Watch price action going into the week.

9:31pm  |   URL: http://fmfx.tumblr.com/post/7750790718/eurgbp-bearish
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FILED UNDER: EURGBP daily chart technical analysis 
July 13, 2011
Weak USD Rallies GBPUSD The USD has weakened significantly as the Federal Reserve talks down the USD and the market rumors about QE3 (a third round of quantitative easing in the United States) gather steam. After making a low at 1.5770, GBPUSD has actually been bullish. Another bounce off of the 1.5750 midterm support level A close above the 61.8% Fibonacci retracement level at 1.5880 despite breaking below it. A new high above 1.6150 To confirm the bullishness, a break and hold above the 61.8% Fibonacci retracement level at 1.6185 would be need with price completing the quarter to 1.6250. If this doesn’t develop, we could see corrective action back towards 1.6000, the 61.8% Fibonacci level of today’s rally. Ultimately, cable looks bullish above 1.6000 despite the bear trend since late April. Full disclosure

Weak USD Rallies GBPUSD

The USD has weakened significantly as the Federal Reserve talks down the USD and the market rumors about QE3 (a third round of quantitative easing in the United States) gather steam. After making a low at 1.5770, GBPUSD has actually been bullish.

  1. Another bounce off of the 1.5750 midterm support level
  2. A close above the 61.8% Fibonacci retracement level at 1.5880 despite breaking below it.
  3. A new high above 1.6150

To confirm the bullishness, a break and hold above the 61.8% Fibonacci retracement level at 1.6185 would be need with price completing the quarter to 1.6250. If this doesn’t develop, we could see corrective action back towards 1.6000, the 61.8% Fibonacci level of today’s rally.

Ultimately, cable looks bullish above 1.6000 despite the bear trend since late April.

Full disclosure

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FILED UNDER: GBPUD daily chart technical analysis 
June 30, 2011
Will GBPUSD Resume Lower? GBPUSD rallied to 1.6115 highs in the Asian session only to fall in a vicious sell-off to 1.5980. However, 15980 has become a strong level of support this week, best seen on the hourly (or 5-minute) chart. A bounce off this level targets the top of the consolidation range at 1.6040/50. A break there targets highs again above 1.6100. If GBPUSD is to continue its bear trend, price will need to break and hold below this 1.5980 level.

Will GBPUSD Resume Lower?

GBPUSD rallied to 1.6115 highs in the Asian session only to fall in a vicious sell-off to 1.5980. However, 15980 has become a strong level of support this week, best seen on the hourly (or 5-minute) chart. A bounce off this level targets the top of the consolidation range at 1.6040/50. A break there targets highs again above 1.6100.

If GBPUSD is to continue its bear trend, price will need to break and hold below this 1.5980 level.

3:36am  |   URL: http://fmfx.tumblr.com/post/7078047269/gbpusd-support
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FILED UNDER: GBPUSD hourly chart technical leveltowatch 
June 27, 2011
GBPUSD Needs A Correction Then Lower As we anticipated 2 weeks ago, GBPUSD has transitioned into a new bearish trend. We were watching for the infamous 1.6000 level to be broken and for price to hold below it. Well, we got both last week as price closed last week BELOW 1.6000 major large quarter point. While a very bearish event, it is prudent to note that price fell to the 1.5912 lows with very shallow to no correction on its fall from 1.6260 high of last week. That makes this pair ripe for corrective action this week. Watch the Fibonacci levels on the daily chart. Also, news this week could fuel the correction if UK GDP surprises and comes in not so bad and US manufacturing comes weaker-than-expected. And yet on the other hand news could very well fuel a continuation in the rally as the marke really expects. Trade what you see!

GBPUSD Needs A Correction Then Lower

As we anticipated 2 weeks ago, GBPUSD has transitioned into a new bearish trend. We were watching for the infamous 1.6000 level to be broken and for price to hold below it. Well, we got both last week as price closed last week BELOW 1.6000 major large quarter point.

While a very bearish event, it is prudent to note that price fell to the 1.5912 lows with very shallow to no correction on its fall from 1.6260 high of last week. That makes this pair ripe for corrective action this week.

Watch the Fibonacci levels on the daily chart. Also, news this week could fuel the correction if UK GDP surprises and comes in not so bad and US manufacturing comes weaker-than-expected. And yet on the other hand news could very well fuel a continuation in the rally as the marke really expects. Trade what you see!

12:42am  |   URL: http://fmfx.tumblr.com/post/6968184492/gbpusd-trend-change
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FILED UNDER: GBPUSD technical daily chart analysis 
June 15, 2011
GBPUSD Heading Into Summer Doldrums After finding support ahead of the 50% Fibonacci retracement level on the daily chart, cable headed higher as expected in reaction to the Fib level at the start of this trading week. However, the pair failed to make a higher high on the daily chart and couldn’t even regain 1.6500 on its rally. Now the pair has made new lows at 1.6167 in today’s trading session after breaking last week’s lows at 1.6216. The fundamentals have proven to support this change as UK unemployment came out worse-than-expected while inflation came in lower-than-expected. Therefore it looks as though the BoE was spot on in its inflation reports and corresponding response in monetary policy after all and will have no further incentive to tighten monetary policy in the near future as the market previously expected. In contrast, US inflation ticked higher and if that trend picks up momentum, the market will begin to anticipate a move in tightening monetary policy sooner than expected. That would spell further USD strength in the midst of GBP weakness which could equal a new bear trend in the GBPUSD as we begin to shift into summer trading. Trade what you see! Intraday and intra-week, price will move up, down, and then up again. But that doesn’t change the fact that long term that the GBPUSD is seemingly moving into a new trend. In the meantime, let’s not get too far ahead of ourselves. 1.6000 is the first major level of support on the daily chart that price needs to break and remain below in order to see this new bear trend really begin to take hold.

GBPUSD Heading Into Summer Doldrums

After finding support ahead of the 50% Fibonacci retracement level on the daily chart, cable headed higher as expected in reaction to the Fib level at the start of this trading week. However, the pair failed to make a higher high on the daily chart and couldn’t even regain 1.6500 on its rally.

Now the pair has made new lows at 1.6167 in today’s trading session after breaking last week’s lows at 1.6216. The fundamentals have proven to support this change as UK unemployment came out worse-than-expected while inflation came in lower-than-expected. Therefore it looks as though the BoE was spot on in its inflation reports and corresponding response in monetary policy after all and will have no further incentive to tighten monetary policy in the near future as the market previously expected. In contrast, US inflation ticked higher and if that trend picks up momentum, the market will begin to anticipate a move in tightening monetary policy sooner than expected. That would spell further USD strength in the midst of GBP weakness which could equal a new bear trend in the GBPUSD as we begin to shift into summer trading.

Trade what you see! Intraday and intra-week, price will move up, down, and then up again. But that doesn’t change the fact that long term that the GBPUSD is seemingly moving into a new trend. In the meantime, let’s not get too far ahead of ourselves. 1.6000 is the first major level of support on the daily chart that price needs to break and remain below in order to see this new bear trend really begin to take hold.

3:14pm  |   URL: http://fmfx.tumblr.com/post/6566815576/gbpusd-trend-change
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FILED UNDER: GBPUSD daily chart technical analysis 
June 13, 2011
GBPUSD put in the perfect Fib move to the pip and hits the 123% Fib extension on the way back up. Textbook move.

GBPUSD put in the perfect Fib move to the pip and hits the 123% Fib extension on the way back up. Textbook move.

1:38pm  |   URL: http://fmfx.tumblr.com/post/6497762966/gbpusd-perfect-fib
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FILED UNDER: GBPUSD 5min chart technical analysis 
May 31, 2011
Update On The GBPUSD Just an update to the chart from yesterday’s analysis. After a spike higher during the Asian session, the 50% Fibonacci level has held and the pair is continuing lower into the Asian close. The pair is well set to move lower and make new lows below 1.6422 as expected. UK manufacturing, net lending, and money supply numbers are due later this morning in the European session. Any upside surprise in the data may upset the current setup. What is more likely, however, is another spike higher that will be met by sellers before the pair moves below 1.6400. 1.6500, now the 61.8% Fibonacci level of yesterday’s price action, has to hold as resistance for this to be true. Be mindful of news and trade what you see! Downside targets are 1.6393 and 1.6360. If bulls step in in a major way due to news, upside targets are 1.6545 and 1.6640.

Update On The GBPUSD

Just an update to the chart from yesterday’s analysis.

After a spike higher during the Asian session, the 50% Fibonacci level has held and the pair is continuing lower into the Asian close. The pair is well set to move lower and make new lows below 1.6422 as expected.

UK manufacturing, net lending, and money supply numbers are due later this morning in the European session. Any upside surprise in the data may upset the current setup. What is more likely, however, is another spike higher that will be met by sellers before the pair moves below 1.6400. 1.6500, now the 61.8% Fibonacci level of yesterday’s price action, has to hold as resistance for this to be true.

Be mindful of news and trade what you see! Downside targets are 1.6393 and 1.6360. If bulls step in in a major way due to news, upside targets are 1.6545 and 1.6640.

11:44pm  |   URL: http://fmfx.tumblr.com/post/6065092239/gbpusd-update
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FILED UNDER: GBPUSD 4hour chart technical analysis 
May 16, 2011
EURGBP Looking To Rally The EURGBP made new lows last week at 0.8673 respecting the 0.8670 major short term support level on the daily chart. The pair then bounced out of that level in a corrective rally to 0.8800 ahead of the 38.2% Fibonacci retracement level of the entire breakdown from 0.9040 - 0.8673 at 0.8814. However, instead of making new lows, the EURGBP made a higher high as the market opened on Sunday at 0.8679. When the pair broke above the 38.2% Fibonacci level (circled above) after the failure at the lows, that was the signal that the pair was headed higher. And in fact it did making a session high today at 0.8670. Breaking through the 61.8% Fibonacci level, the pair look like it will target 0.8800 and break above to test 0.8810/20. Only a break above shifts focus back to bulls.

EURGBP Looking To Rally

The EURGBP made new lows last week at 0.8673 respecting the 0.8670 major short term support level on the daily chart. The pair then bounced out of that level in a corrective rally to 0.8800 ahead of the 38.2% Fibonacci retracement level of the entire breakdown from 0.9040 - 0.8673 at 0.8814.

However, instead of making new lows, the EURGBP made a higher high as the market opened on Sunday at 0.8679. When the pair broke above the 38.2% Fibonacci level (circled above) after the failure at the lows, that was the signal that the pair was headed higher. And in fact it did making a session high today at 0.8670.

Breaking through the 61.8% Fibonacci level, the pair look like it will target 0.8800 and break above to test 0.8810/20. Only a break above shifts focus back to bulls.

1:03pm  |   URL: http://fmfx.tumblr.com/post/5552004359/eurgbp-looks-to-rally
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