The EUR-GBP on a Long-Term Chart

By: Mike Kulej

After reaching a high of 0.9800 in late 2008, the EUR-GBP cross has been in a slow, but steady downtrend. The price found firm support at 0.8400 few months later and now is once again trying to test it.

On a weekly chart, this is a very important level. If broken, this pair could experience an accelerated selloff, since there is no other significant support until 0.7690. That is about 700 pips, a large objective for this cross. Right now, other technical indicators are in agreement with the price action and are pointing lower as well. The Relative Strength Index has a nice down slope, yet is still way above what could be considered an oversold value.

Same for the MACD. This indicator also turned negative and has plenty of room to continue. In this environment, closing of a weekly bar price under 0.8400 would confirm the existing bearish trend. Most of the fundamental news from Europe are also log term negative for the Euro, supporting the technical picture.