With this morning's low of .8366, EURGBP has now retraced more than .618 of the move from .8068 to .8941. It's nearing the head and shoulder target I wrote about on Nov. 10th. Support is at.8350/44 and .8269 (the uptrend line from the July low of .8068). One would expect a rally but last week's outside candle (higher high and lower low than the prior week) along with the long bearish candle for the week ending 11/12 means it's probable the pair may be headed back to .8068. On the monthly chart (not shown) it looks as though an evening star is forming with the completion today. Since the high of this pattern was the downtrend line from December 2008, the pattern is strengthened. Any rally will probably be contained by the tough resistance from .8408 to .8500. So shorting rallies seems to be the way to go if one isn't already short.
Here's the weekly chart.
© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.
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