picking tops and bottoms

The EURGBP may be at a historical turning point.

This is a chart of every price that has ever been recorded in the EURGBP (DM prices prior to the actual Euro).  The rally from the all-time low (which was when currencies began free floating) is clearly a 3 wave move.  Since the all time high was registered in 1995, the EURGBP has declined and advanced in small 3 wave movements (small relative to the moves in the prior decades).  A C wave may be underway now that will bring the EURGBP below the 2000 low of .5680 within the next few years.  Additionally, monthly RSI (14) is rolling over from above 70 (which is considered overbought).  

Zooming in on the daily chart, we see that the rally from the January 2007 low is complete in 5 waves and that at least a correction of that advance is underway towards lower levels.  As such, the EURGBP has a high probability of declining from near current levels.

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals  every weekday morning (9 am EST), COT Analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.

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