EUR/GBP - Q4 2011 Forex Forecast

By: Doug Rosen

This pair appears to be caught up in a fib war. On the monthly chart it has fallen from the 61.8 fib from its recent swing down, but on the weekly it has bounced off the 50.0 fib of its recent move up.



Looking at the monthly chart price has bounced off of an ascending trend line and is now getting a boost from the monthly 21 ema. I still cannot ignore the fact theat the Stochastics is in the overbought zone crossing down into the trade zone. It could be that we just may be entering a consolidation pattern but price seems to be making higher highs and higher lows.



Moving over to the weekly chart Stochastics is approaching the oversold zone, yet it is still in the trade zone. When price hit its 50.0 fib to the upside it also bounced off the 144 ema as well as the lower Bollinger Band, all of which are bullish signs. The weekly candle has pierced the 21 and 13 ema and has pulled back but now I do expect to see continuation to the upside.



Moving over to the daily chart price has obviously made a 38.2 Fib from its recent move up and the Stochastics is in the trade zone pointing up. I see price continuing upward to the descending trend line on the daily chart where I will expect a decision has to be made as to whether there will be a breakout to the upside or price will simply drop like a brick. If price breaks the trend line then I expect it to continue to 0.8890 region at which point I expect it to drop since that is very strong visual resistance. If price breaks that level then I expect it to travel to the 0.9100 region where it will most likely drop back down to 0.8600 region.