By: Doug Rosen
Yesterday the EUR/GBP took a dive. This was due to GBP strength over the EUR weakness. Briefly looking at the EUR/CHF weekly chart the stochastics is in the overbought zone and the 5 emas appears to be rolling over to the downside. On the daily chart price is riding the 5 ema down, however, there is a gap of space in between the daily candle and the daily 5 ema and the stochastics is in the oversold zone so I expect a retracement back up to the 5 ema and possibly even to the 13 ema so there could be some EUR strength until the retracement completes itself. Now, taking a look at the GBP/CHF weekly chart price has bounced off the 13 and 21 ema to the upside, hence causing GBP strength, however, there is a descending trend line that has been respected 4 times so far and is overlapped with a 55 ema and the stochastics is in the overbought zone. Over to the daily chart for this pair we have an upper Bollinger band in the same vicinity as the weekly 55 ema pointing down. This confluence exists around 1.4225. Now, I begin with the weekly chart for the EUR/GBP. Price is against a support trend line that is acting as support. It has been slightly breached in the past and could be broken, however, if broken a 144 ema exists not too far below as well as a lower Bollinger band that no doubt will cause a bounce.
Onto the daily chart price is obviously against support and is outside the lower Bollinger band and spaced quite a ways from the daily 5 ema so a retracement back up to the 5 ema is very likely.
Moving on to the 4 hour pivot chart price nearly came down to the 78.6 fib of last month's range and reacted. Stochastics is in the oversold zone and price has touched the lower Bollinger band and a bounced is expected. Price could retrace back up to the 5 ema or as high as the monthly central pivot at 0.8659.
Looking at the hourly weekly pivot chart I see that price has bounced off the weekly S2 which overlaps with the 78.6 fib of the previous month range I just mentioned. Stochastics is also in the oversold zone and the 5 ema looks as though it could roll over.
Finally, looking at the 15 minute daily pivot chart I see that price has already reacted a couple times off yesterdays low. Based on the heavy move down this pair just experienced profit taking is expected therefore many buy orders could hit the market causing this pair to retrace up as high as 0.8670 - 0.8690 area. A retracement like that should cause EUR strength and GBP weakness.