Guest Commentary: Making the most of a Major EURGBP Reversal
* Euro Sterling is repeating itself within a clear upward ratchet without momentum.
* Since this could be preparation for a major bull market, we are staying core long.
* Since this could also be part of a typical consolidation base, we have reduced longs above 0.7900.
There is a difference between trading and analysis, between a trade and a view, between being right and making money.
So we are long Euro Sterling short medium and long term but now that is finally got above 79 to the 38.2% retracement and not yet broken the 7955 key resistance should we lighten longs?
There are 3 striking observations about the upward ratchet since Euro Sterling spiked the 7785 target.
- It seems to be repeating itself on a larger and larger scale reminiscent of the Mandelbrot expansion.
- This is consistent with a larger leading diagonal or wedge and deeper correction suggesting Euro Sterling will fade 7910 at first for 7820 and later 7955 before a typical retest of the 7755-7785 lows in a consolidation base before it accelerates through 7955. This is our favoured view.
- Thirdly there is a similarity between this and previous price action most noticeably February 23rd 2010 (Fractal 2 in diagram) where Euro Sterling actually faded above 79 only for 7845 the 50% in an irregular correction before an explosion through 7955 to the equivalent of 8165.
We have cut 1/3 of our long looking to buy even more when it has resolved the consolidation versus reversal issue either with a retest of the lows or a break of 7955.
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