EUR/GBP Channel Offers Ideal Scalping Environment
The EUR/GBP has been in a short-term ascending channel as risk appetite has slowly crept back into the market which tends to favor the single currency as it holds a higher correlation. Dour comments from Fed Chairman Ben Bernanke at the Jackson Hole Conference sparked a brief flight to safety but not enough to break the pair from its current formation. President Trichet is also expected to make comments and could potentially generate volatility for the pair, if he hints at accelerating the removal of stimulus. The potential yield differential could lead to continued Euro strength versus Sterling.
Key Technical Levels
Short-term Channel Provides Target Levels
Charts created using Strategy Trader– Prepared by John Rivera
A longer-term descending channel has limited the EIR/GBP’s variance providing a stable scalping environment. The current test of resistance could spell an end to the rising short-term channel and provide an inflection point which may see price action consolidate further. The 20-Day SMA at 0.8247 has also proved to be a formidable barrier and a potential target level. Meanwhile, the current bullish formation is providing identifiable levels for entering and exiting positions.
Current Channel Provides Scalping Environment
Charts created using Strategy Trader– Prepared by John Rivera
Key Support/ResistanceLevels to Watch
|
Pair |
S/R |
Level |
Spot |
Valid Since |
Market Influence |
|
EUR/USD |
Resistance |
100-Day SMA |
1.2731 |
08/20/10 |
Low |
|
GBP/USD |
Support |
50-Day SMA |
1.5395 |
06/23/10 |
Medium |
|
NZD/USD |
Support |
Psychological |
0.7000 |
07/07/10 |
Medium |
Quantitative Metrics
A channel bound EUR/GBP has seen its Bollinger band width narrow to 258 pips putting at the bottom of the most traded pairs. Adding to the case for targeting the pair is an ATR of 64 pips, also the lowest of the majors. Subdued daily volatility limits potential risks for the pair, making it an ideal scalping target.
Charts created using Strategy Trader– Prepared by John Rivera
Volatility / Activity Indicators
|
EURUSD |
GBPUSD |
USDJPY |
USDCHF |
USDCAD |
AUDUSD |
NZDUSD |
GBPJPY |
EURJPY |
|
|
ATR(14) |
0.0135 |
0.0141 |
0.8700 |
0.0126 |
0.0106 |
0.0105 |
0.0095 |
1.5778 |
1.3628 |
|
ATR% |
1.06% |
0.91% |
1.02% |
1.23% |
1.00% |
1.18% |
1.34% |
1.20% |
1.26% |
|
20-5 Day SMA |
0.0250 |
0.0199 |
0.8955 |
0.0103 |
-0.0195 |
0.0143 |
0.0126 |
3.0895 |
3.2731 |
|
Boll. Band Width |
0.0900 |
0.0709 |
2.6233 |
0.0371 |
0.0569 |
0.0476 |
0.0494 |
9.2277 |
10.1586 |
|
1 wk Implied Vol |
11.9225 |
10.3525 |
12.6350 |
12.5625 |
11.6650 |
13.2250 |
12.9750 |
15.0350 |
14.9950 |
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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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