EUR/GBP Begins Week with Bearish Attitude

This new trading week begins with what appears as a heavy EUR/GBP. I start out my analysis as usual taking a look at the EUR/CHF and I see that it is up against the daily 233 ema, a very strong area of resistance. This is important to note since this can cause bearish pressure on the EUR/CHF which means EUR weakness which could add to bearish price action for the EUR/GBP based on the principles of correlation. On the weekly chart the 13 and 21 ema are parallel with each other and are just above the weekly candle. The weekly 5 ema looks like it is rolling over to the downside. Looking at the daily chart the 5 ema is crossing below the other ema's which appears to be very bearish and I would like to note that on a normally dull Sunday this pair has already dropped 50 Pips which is a relatively large drop for this pair, a 50 pip drop for UER/GBP is comparable to an 80 pip drop on other pairs.

EUR/GBP Daily Chart

I would also like to note that strong visible support exists around the 0.8655 area so I would keep a close eye on that level, some type of reaction is expected. Moving over to the 4 hour chart I see that most of the bearish action is taking place on the current 4 hour candle as I write my analysis for this pair. Price has broken a trend line of mine and is outside the lower Bollinger Band so I do expect a fib retracement soon. I would also like to note that 0.8642 is last months low, just 15 pips below visual support on the daily so i believe the zone between 0.8642 - 0.8655 is the support area that may initiate the pullback. 0.8636 is also the weekly M1 but 0.8670 is last week's low and 0.8665 is the weekly S1 and a reactionary bounce is also very probable at that level as well. Speed and momentum are high for this pair. Much angle and separation with the ema's so support has a chance to be broken, but price action is non-linear and a bounce is always expected before continuation to the downside.

EUR/GBP 4 hour chart

Finally, I look at the 15 minute chart and as all other time frames price is looking extremely bearish and we are gracefully riding the 5 ema. My bias for this pair remains bias, yet I will watch for bounces in the zones I mentioned. Bullish scalps will not be out of the question and opportunities to catch the wave down should present themselves and a bearish EUR/GBP means GBP strength so bare this in mind if watching the GBP/USD.

EUR/GBP 1 hour chart