: EurGbp traded nicely last week, in holding the base of the long term channel and bouncing well from the 0.6935 low to exactly reach our topside target of 0.7100, before closing the week at 0.7065. Daily momentum now points to the chance of further gains and a break of 0.7100 would open the way towards 0.7140 (38.2% of 0.7482/0.6934) and possibly towards the strong resistance at around 0.7200 (descending trend resistance/100 DMA/23.6% of 0.8038/0.6934), which if seen would appear to be a decent sell opportunity, with a SL placed above the early July, minor triple top at 0.7225.The monthly charts do point lower though and, given the diverging central bank policies between the ECB/BOE, an eventual move towards long term Fibo support at 0.6650 (76.4% of 0.5680/0.9802) would seem to lie ahead. That is a long way off though and before then there will be plenty of support at 0.7000, 0.6985, 0.6960 (all minor) ahead of the current trend low at 0.6935 and the long term channel base, currently at around 0.6905.
In the short term, buying a dip towards 0.7000, with a SL placed sub 0.6985 may be a plan, looking for another squeeze to 0.7100/40 area.
EURAUD: The cross appears to be breaking higher after having broken and closed the week above the long term descending trend resistance/ channel, which comes in at 1.5000. Further advances look likely, although resistance lies close by at 1.5120 (23 Dec ‘14 high), but above which could see a rapid move towards the 17 Dec 2014 high at 1.5330.Support should now arrive at 1.5000, but below which would signal a false upside break and could take the cross quite sharply lower and back towards 1.4900 and even to the minor rising trend support at 1.4630. I don’t think we see it down here though and, while preferring to trade from the long side, a nimble stance is required as the dailies are giving the first hints of some minor bearish divergence.
: The cross continues to move to higher ground, last week reaching a peak of 2.1342, pretty much where it closed.As we said last week, having now taken out the March 2009 high of 2.1002, the way looks open to much stronger gains, with the next realistic resistance being at 2.2213 (61.8% of 2.7055/1.4379). Before then the next target will be the 15 Mar 2009 high at 2.1496, but there is little above there to stop in heading on to 2.2000.
Support should arrive at 2.1000 but leave room for a deeper correction as well, which could take the cross back towards last week’s low, where rising trend support lies, at 20.888, and possibly to 2.0740 (23.6% of 1.8826/2.1342). Buying dips remains favoured..
EurJpy had a choppy week, finishing around 100 points higher after a range of 133.90/136.40, but as with last weeks outlook, it appears as though it is in the process of building a Head/Shoulder formation, with a neckline at 133.35 (also 100 DMA), a break of which would target 125.00, or thereabouts, so worth watching.
It is premature to sell it yet but a break of the neckline would see an acceleration lower towards 130.00 and lower. The 200 DMA is at 136.90, so SL should be placed above here, or ideally above the 100 WMA at 137.60.
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