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EUR/GBP Candlesticks and Ichimoku Analysis
Candlesticks and Ichimoku Weekly | Written by Action Forex | Dec 22 11 08:36 GMT Posted by Byung Koo Mulder
Weekly Last Candlesticks pattern: Hammer -- Time of formation: 27 June 2010 -- Trend bias: Sideways
Daily Last Candlesticks pattern: Morning star -- Time of formation: 7 Feb 2011 -- Trend bias: Sideways
EURGBP - 0.8343
Although the single currency has fallen again after brief recovery and the breach of 0.8357 support signals the decline from 0.9084 top may extend weakness towards previous support at 0.8285 (just above 100% projection of 0.9084-0.8531 measuring from 0.8831 at 0.8278), oversold condition should prevent sharp fall below 0.8235-40 (1.236 times projection of 0.8831-0.8486 measuring from 0.8665) and risk from there has increased for a corrective rebound to take place later this month or early next month.
On the upside, whilst a recovery to 0.8385/90 cannot be ruled out, renewed selling interest should emerge around the Tenkan-Sen (now at 0.8432) and bring such a decline to aforesaid downside targets. Only above 0.8484-86 (current level of the Kijun-Sen and previous support) would abort and suggest a temporary low is formed, bring retracement of recent decline to 0.8520 (another previous support) but reckon resistance at 0.8562 would cap upside, bring another selloff later.
Recommendation: Sell at 0.8415 for 0.8300 with stop above 0.8490
On the weekly chart, after last week?s long black candlestick, the single currency continued to fall and hit a low of 0.8302 yesterday, adding credence to our bearish view that the fall from 2011 high of 0.9084 is still in progress for at least a strong retracement of the rise from 0.8067 (2010 low) to 0.8278-85 (100% projection of 0.9043-0.8531 measuring from 0.8831 and previous support), however, near term oversold condition should limit downside and reckon 0.8200 would hold from here, bring a corrective rebound later.
On the upside, expect recovery to be limited to this week?s high of 0.8416 and previous support at 0.8486 (now turned into resistance) should hold, bring such a decline to aforesaid downside targets. Above said resistance at 0.8486 would suggest low is possibly formed but only a weekly close above the Ichimoku cloud bottom (now at 0.8555) would confirm and bring a stronger rebound to 0.8615-20 and possibly test of resistance at 0.8665 but reckon the Kijun-Sen (now at 0.8693) would remain intact, bring another decline.
