The Euro and Pound have continue to find support as signs of sustainable growth in the region and dissipating concerns over the banking system and sovereign debt have spurred bullish sentiment. The EUR/GBP has started to consolidate as the stalemate between the currencies continues. A gain in U.K. consumer credit and a less than expected decline in mortgage approvals have added sterling support. Meanwhile, European economic confidence rose to the highest level in two years as strong demand for exports fuel optimism. Therefore, we could see the pair continue to trade sideways until one economy distinguishes itself from the other, making the pair a scalping target.
Key Technical Levels
Declining Trend line Offers target levels
Charts created using Strategy Trader– Prepared by John Rivera
The EUR/GBP’s 20 and 50-Day SMA’s at 0.8291 and 0.8376 respectively are converging and have provided support and resistance levels. Price action has remained confided between the technical levels providing target level for traders. A descending trend line has also limited upside potential and also generated opportunities to enter and exit positions.
Converging SMA’s Confining Price Action
Charts created using Strategy Trader– Prepared by John Rivera
Key Support/ResistanceLevels to Watch
|
Pair |
S/R |
Level |
Spot |
Valid Since |
Market Influence |
|
CAD/JPY |
Support |
20-Day SMA |
84.03 |
07/22/10 |
Low |
|
EUR/USD |
Resistance |
38.2% Fibo of 1.5141- 1.1877 |
1.3120 |
05/04/10 |
Moderate |
|
USD/CAD |
Support |
100-Day SMA |
1.0305 |
06/23/10 |
Moderate |
Quantitative Metrics
The EUR/GBP’s volatility has significantly quieted as both currencies continue to benefit from the same fundamental drivers. An ATR of 78 pips places it at the bottom of the most traded pairs, making it an attractive scalping target. The Bollinger band has started to widen following a bullish rally but at 358 pips, its level of variance is acceptable for a high frequency trader.
A Widening Bollinger Band and Declining ATR Gives Mixed Signals
Charts created using Strategy Trader– Prepared by John Rivera
Volatility / Activity Indicators
|
EURUSD |
GBPUSD |
USDJPY |
USDCHF |
USDCAD |
AUDUSD |
NZDUSD |
GBPJPY |
EURJPY |
|
|
ATR(14) |
0.0142 |
0.0155 |
0.8700 |
0.0117 |
0.0127 |
0.0133 |
0.0108 |
1.9417 |
1.6406 |
|
ATR% |
1.09% |
1.00% |
1.00% |
1.12% |
1.22% |
1.48% |
1.49% |
1.43% |
1.44% |
|
20-5 Day SMA |
-0.0201 |
-0.0260 |
0.2787 |
0.0007 |
0.0083 |
-0.0221 |
-0.0157 |
-1.8428 |
-1.4050 |
|
Boll. Band Width |
0.0700 |
0.0703 |
2.5873 |
0.0251 |
0.0435 |
0.0782 |
0.0582 |
5.7072 |
5.0372 |
|
1 wk Implied Vol |
10.8700 |
9.8225 |
10.6100 |
10.0425 |
9.9850 |
13.0950 |
13.2050 |
14.2200 |
13.9500 |
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To discuss this report or be added to the email list, contact John Rivera, Currency Analyst: jrivera@fxcm.com
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