Technical Outlook 

EUR USD did not manage to clear yesterday's 2680/2700 area but we are now clearly trading above 61.8% Fib 92 - 01 bear wave and 76.4% Fib 95 - 01 bear wave. If the Euro manages to clear the highs once again today, the 1.2500/2600 will become a strong S for the pair. For now, ST traders might try to exploit the intraday R at 2720/50. However, unless we come back quickly below 2500 and break the 10 SMA, the Euro should test the 1.30 area since nothing serious is present before the level. USD JPY's High at 107.38 yesterday was short lived and the pair is now sitting slightly above the key 105.60/106 area where the 150% Fib extension from the 01 - 02 bull wave and Lower Bollinger band are present. The area should generate some sort of short-lived rally but immediate R at 106.80/107 (ST Trend S broken now R and 10 SMA) should attract Yen bulls. Volatility increased yesterday by breaking last weeks' triangle but fakeouts in forex rate after such patterns are quite common. Cable broke the 1.7850/7900 area (23.6% Fibo from the 84 - 93 bull wave and upper BB). The area should now be a decent S for further upside. The next acceptable R is at 8250 (123.6% extension from the 98 - 01 bear wave) and few bears will try Sterling shorts before 7800 is cleared on the downside. The few intraday risk takers remaining will perhaps try to exploit the 8120/40 area because of the MT uptrend R and the grossly overbought oscillators but lately short Pound does not seem like a recipe for success. USD CHF made new lows yesterday and stayed faithful to its ST channel. The pair is now on yesterday's intermediate S (2300/30: ST Trend S and Lower BB) but nothing extremely solid is present before the 2215 where 23.6% Fibo from the 93 - 95 bear wave should resist the Swiss. Intraday R is to be found at the 2400 level thanks to the channel R and 10 SMA. As long as the area is not cleared, the perspectives are still to the downside. 



TECHNICAL OVERVIEW 



EUR GBP daily 

Comment from 12/08
EUR GBP got back above the key 6900 area pretty quickly to find the 11/19 high at 7038, slightly above our 7010/25 area. The market had a correction once again to the key 6890/6950 zone. The low on 11/24 was 6929, 109pts lower. The EZ currency then resumed its rally to find a high at 7049 2 days ago and 120pts higher. The outlook is fairly neutral on the pair for now. 7050/70 will be the obvious entry for range players thanks to the 50% Fibo from the Jun - Nov bear wave and Upper BB. 6900/6920 will be the other end of the range and should provide decent S thanks to a strong fibo confluence (23.6% Fibo from the Jun - Nov bear wave & 38.2% Fibo from the 95 - 00 bear wave). Finally if the cross breaks higher, it is worth noting that there is no solid R before the 7250 area the 50% Fibo from the 95 - 00 bear wave.




01/06
On 12/08, 12/16, 12/22, 12/31 EUR GBP had highs between in the 7069/7091 range. Each time the cross tested the area, a 60 to 100pts retracement occurred. Today, the outlook is slightly bullish since we clearly found S on the 200 SMA. Buyers will probably step in 2 key areas: 6980/7000 and 6880/6920. The first area is the 200 SMA, ST Trend S and Low BB while the second is the strong Fibo confluence mentioned in our former comment (23.6% Fibo from the Jun - Nov bear wave & 38.2% Fibo from the 95 - 00 bear wave). On the bearish side, ST traders might try to use the 7080/7100 area once again thanks to ST Trend R, High BB and ST Fibo confluence (61.8% Fibo from the May - Nov bear wave & 76.4% Fibo from the Jul - Nov bear wave). The only serious area for the bears is in fact the 7250 level which offers R to the EZ currency thanks to the 50% Fibo from the 95 - 00 bear wave and last May's swing high. Currency trading news may hold the key to the next levels.

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