EUR/GBP - Prepping for a Downside Breakout

By: Doug Rosen

Before I look at this pair, I start out taking a quick peak of the EUR/CHF and it appears to me that the EUR/CHF is range bound across all timeframes. Next, I take yet another quick peek at the GBP/CHF and it appears to be slightly bullish. At the very moment it seems to be dropping just a bit but that may very well be just a brief retracement setting up for further continuation to the upside for this pair which would mean continued GBP strength.



Now, looking directly at this pair and starting out with the weekly chart I can see that it is very obvious that the GBP has been stronger than the EUR as of lately and that this pair starts the new week out at the bottom of an apex. The weekly 5 ema is falling down on price and it looks as though price is breaking out of this apex.



Looking at the daily chart we are making a retracement to the upside and the daily 5 ema is just below the 38.2 fib of the recent drop down which also coincides with the new monthly and weekly central pivot point at 0.8637. This is the area I expect the retracement to end and for continuation to the downside to begin again. That fall to the downside should be what sparks the downside breakout and at that point I would be watching other pairs for GBP strength.