Previous: EUR/GBP at New Lows and Exposes 0.77 (7/6)

EUR/GBP 1HChart 7/8/2012 2:30PM EDT

During the previous FXTimes update, I noted that EUR/GBP exposed the 0.77 level, a consolidation low from 2008. Basically, I would not be thinking of counter-trend scenarios until the market gets close to that. For now, I see rallies as correction, and label the current rally from 0.7868 to 0.7910 as such. Here are some factors that might be reason for resistance here around 0.7910, at least in the near-term.

1) Note in the 1H chart that the rally so far finds resistance at the previous support.
2) We retraced back tot eh 100-hour simple moving average.
3) Also, note that the RSI reading is sitting at 60.

These would be reason for resistance in a persistent bear trend, but it does not mean a break above 0.7915 would be reason for a reversal.

In fact, I have the bullish outlook shelved until a break above 0.80. However, a failure to hold the market below 0.7915 could lead to some sideways market for a longer period than we have had so far in the bear run from 0.8090 that started at the end of June.

A push below 0.7868 with the 1H RSI pushing below 40 would confirm a bearish continuation.

EUR/GBP 4H Chart 7/12/2012 9:15PM EDT

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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