Market Analysis-SRO
| 07 December 2011
| Article Index |
|---|
| Market Analysis-SRO |
| Page 2 |
| All Pages |
EURO-BPOUND-CROSS RATE
The daily configuration of the EURGBP reflects a more positive tone (bullish) from a support price level at 0.8500/10 (S2) and 0.8535/40 (S1) respectively. Prices has held above these levels contrary to the bearish weekly candlestick formation that defines its directional trend lower. This may only be temporary for now.
The fundamental actions of a concerted central bank intervention supported these technical price levels equivalent to the 1.3180 EURUSD support which has been defended from further depreciation and the current summit meetings with the EU leaders to really find a resolution for the debt crisis. However, if such resolution is not realistic enough then the continuation of the trend lower would again prevail after the intervention has been absorbed. Thus the Tug of War between the two continents carefully watching the developments that ultimately affects the financial markets and spill over to Asia region. Otherwise, the only remaining concern is whether these rating agencies would downgrade a majority of these other countries as a whole since it has dragging the overall global economy to almost a stand still, so to speak.
EURGBP DAILY
On the other hand, the technical resistance levels for the EURGBP cross is at the 0.8660/80 (R1) and 0.8770 (R2) trading range levels. The curent price as of this writing is at 0.8598 slightly above the 21 day MA in line with the EURUSD attempting to drive the prices at its 1st resistance (R1) price of 1.3500. The slightly positive news from the EU zone is supporting this recent action in the European session after the Asian trading Wednesday may again prove to be a temporary correction. Though, this can only mean that a probable corrective move is in the making within a major bearish weekly chart for the cross. And this also holds true for the EURUSD major currency.
The GBPUSD has held its ground reflecting a limited upside for the EURGBP cross, though the potential for such upward correction is seen as of today. A mid-week move higher to lower would not be discounted as trading volumes would appear and book-squaring may start as early has the middle of the month. So do expect a wider price swing on a daily movement in both directions. But the overall trend analysis remains on the bearish side with daily corrections along the way. A retest of the lower band support will be seen in between trading sessions. So keep watch if prices falls within stricking distance and below the 0.8500/10- 0.8535/40 levels as stated above. Whenever this happens a greater volatility with momentum would be reflected in the price swing heading lower and a contrary price direction from the GBPUSD vs. the EURUSD can be expected.
