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EUR/GBP Short-Term Technical Outlook (update)

Monday, 01 September 2008 10:57:08 GMT  |  David Song, Currency Analyst

Currency Pair: EUR/GBP
Short-Term Bias: Long
Chart: 15 Min Charts

The EUR/GBP has peaked to 0.8136 earlier in the session, triggering an overbought RSI signal in the process. We expect the upward trend to continue this week, but may see the euro-pound fall back to trade within the channel over the next few trading session.

Analysis Update

                The EUR/GBP continues to hold above the channel, with the uptrend in the 120 SMA remaining intact. Price action looks to be holding range between 0.8130 and 0.8080, and may stay within range for till tomorrow as the US and Canada is offline for the holiday.

                As volatility dries up in the US session, the euro-pound may continue to face congestion at its currently level. We expect price action to trade within in the channel over the next few trading session, and will continue to hold a bullish outlook for the pair. The euro may continue its rally to test 0.8200 for resistance, while our short-term outlook suggests that the pair should hold above 0.7750 over the next few months. However, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.

 

Analysis

Last week, the EUR/GBP gained momentum to break out of its previous range, with price action moving above 0.8000. After gapping earlier in the session, the pound continues to face heavy selling pressures, leading the pair to break above the channel.

The EUR/GBP has peaked to 0.8136 earlier in the session, triggering an overbought RSI signal in the process. We expect the upward trend to continue this week, but may see the euro-pound fall back to trade within the channel over the next few trading session. We will hold a bullish outlook for the pair as the 120 SMI continues to trend upwards, and expect the pair to test 0.8150 for resistance over the next few days. Be sure to check out Jamie’s Technical Outlook for additional information on the major currency pairs.

To contact the author of this article, please email: dsong@fxcm.com

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