Euro Cross Pick 03.14.2011
I got pushed out of the short EUR/GBP trade from the previous week as the exchange rate rallied to a high of 0.8655 on Friday, but I expect to see a near-term correction unfold in the coming days as the relative strength index approaches overbought territory. I am looking for an another opportunity to sell the euro-pound as the near-term advance appears to be tapering off ahead of the 38.2% Fibonacci Retracement from the 2008 high to the 2010 low around 0.8720-40, and the pair should trend lower going forward as it maintains the downward trend from the end of 2008. As a result, I may take another stab at selling the EURGBP if we see the pair close lower on the day, and will look for a test of the 100-Day SMA at 0.8509, with a tight stop at 0.8671, the January high.
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