Forex Technical Update

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EUR/GBP 4H chart 7:40AM EDT 11/2/2012

EUR/GBP 11/2/2012 4H chart

Head and Shoulders: The 4H EUR/GBP chart shows that a head and shoulders pattern is about to be complete. As we start the Friday US session (11/2) of the week, the EUR/GBP is trading around the 0.80 psychological handle, testing this H&S neckline. Failure to clear below 0.80, and a return above 0.8050 will be a bad sign for the H&S anticipation. (There is a short-term support/resistance pivot zone and the 200-4H-SMA in the 0.8038-0.8044 area).  If the RSI is pushed above 60, it would also be a sign that the bearish momentum is failing to build up.

Rising trendline: The daily EUR/GBP chart shows the market also testing a rising trendline going back to the July low of 0.7756. The daily RSI reading is also at 40. A clear break below shows loss of the bullish momentum set by the rally since July. A break below the trendline, but failure to bring the RSI below 40 would be a sign of a false break down, especially if the EUR/GBP has the ability to push back above 0.8050.

Targets: 50% retracement at 0.7960 is also a previous resistance pivot. Then the 61.8% retracement at 0.7912 is near a previous support pivot around 0.7915. There is a swing projection toward 0.7920 as well.

EUR/GBP Daily chart 7:45AM EDT 11/2/2012

EUR/GBP 11/2/2012 daily chart

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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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