Weekly Last Candlesticks pattern: Bearish engulfing
Time of formation: 04 Jul 2011
Trend bias: Sideways
Daily
Last Candlesticks pattern: Doji
Time of formation: 6 Feb 2012
Trend bias: Sideways
EURGBP – 0.8069
Despite this week’s initial rise to 0.8165, lack of follow through buying on break of previous resistance at 0.8163 and current retreat suggest a top is possibly formed and consolidation with mild downside bias is seen for test of the Kijun-Sen (now at 0.8044) and possibly to previous support at 0.8023, however, reckon the Ichimoku cloud top (now at 0.7987) would contain downside and bring rebound later. Only break of said resistance at 0.8165 would signal the rise from 0.7756 low has resumed and extend gain towards 0.8220 (61.8% Fibonacci retracement of 0.8506-0.7756) but reckon upside would be limited to previous support at 0.8283.
On the downside, a daily close below the Ichimoku cloud top (now at 0.7987) would signal top has been formed and bring test of 0.7923-34 (previous support and current level of the lower Kumo) but a daily close below there is needed to signal the rise from 0.7856 has ended and bring weakness to 0.7890, then 0.7850 but support at 0.7813 should remain intact, bring rebound later.
Recommendation: Turn short at 0.8120 for 0.8010 with stop above 0.8180
On the weekly chart, despite initial rise to 0.8165 earlier this week, lack of follow through buying on break of previous resistance at 0.8163 and current retreat look set to form a black candlestick this week, hence consolidation with mild downside bias is seen for test of 0.8023-26 (previous support and current level of the Tenkan-Sen), however, only a weekly close below the Kijun-Sen (now at 0.7976) would confirm top has been formed and bring weakness to previous support at 0.7923. Looking ahead, only a sustained breach of this level would signal the rebound from 0.7756 low has ended and bring further weakness to 0.7885-90, then 0.7850 but break of 0.7813 support is needed to confirm resumption of downtrend for a retest of 0.7756 eventually.
On the upside, a sustained breach of said resistance at 0.8165 would revive near term bullishness for a stronger retracement of recent decline towards 0.8220-22 (61.8% Fibonacci retracement of 0.8506-0.7756 and previous support) and possibly 0.8290-95 (50% Fibonacci retracement of 0.8831-0.7756) but reckon 0.8350 would limit upside and price should falter below 0.8395-00.
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