By: Doug Rosen
I start out today's analysis for the EUR/GBP examining the EUR/CHF and I see it is at a major level of resistance on the weekly chart, up flat smack against a descending trend line that has been respected three times in the past overlapped with a 55 ema just above. If this lines breaks it could mean EUR strength and there is a good chance it could be broken because there is wide angle and separation between the respective ema's as well as an open upper Bollinger Band pointing up which means all means high speed of market and strong momentum, the forces needed to break through an area of resistance. On the daily chart price is riding the 5 ema and the daily upper Bollinger Band is open and pointing up. Looking at the weekly GBP/CHF same story, we are beginning to break a weekly descending trend line that has been respected on three previous occasions with upper Bollinger Band open and pointing up. On the daily chart another open Bollinger Band which points up, riding the 5 ema up and it looks as though the trend line has already been busted. So far, based on the analysis thus so far, both the EUR and GBP seem to be stronger than the CHF.
Now, let's take a look at the EUR/GBP. Starting out with the weekly chart it looks bearish off the bat. Price is approaching the 5 ema and for sure there will be a bearish reaction forcing price down adding to GBP strength. Of course, price could pierce the 5 and go to the 55 then fall and this is a weekly chart and that 55 is yet another 70 pips so we must watch this level carefully. Zooming into the daily chart we see price is riding up a bit and that is only because price recently made a fib of the recent swing high. I expect a reverse fib soon overlapped with the 21 ema at 0.8660 to force price down, once again adding to GBP strength.
Moving over to the 4 hour chart I see price is approaching the Monthly Central Pivot Point which overlaps with a 21 and 13 ema just below the 38.2 fib of the recent move down at around 0.8637 which also overlaps with the hourly 144 and 55 ema.
With all this being said, you can look for shorts for the EUR/GBP at that level with further confirmations or look for GBP strength and EUR weakness while trading other pairs.