In support of one of my previous articles, which said the USD is facing a downward correction; this article is intended to show how the Euro is in fact positioning itself for an upward movement in the days ahead, and that the EURGBP pair may be one of the primary beneficiaries of this movement.
Below are 3 charts (all on the weekly timescale): EURGBP, EURCAD, and EURUSD.
We can see in the first chart that the EURGBP received support upon hitting the lower border of its apparent consolidation trend.
At the moment it is testing a very significant resistance line at 0.8994.
With powerful support from the consolidation trend (also known as a Pennant Formation), this pair should break through that resistance line.
The other pairs will demonstrate why the Euro does indeed appear to be moving up.
On the EURCAD chart (below) we can see that the price has actually hit a significant psychological barrier at 1.4970. This barrier may create the necessary pause in this pair to push some intra-day traders, and technical analysis junkies, back into a bullish posture long enough to assist the EURGBP’s upward push. We can already see this pause shaping as it seems like a doji candlestick formation may be developing.
Additionally, as presented in my other article, the EURUSD pair is at a very strong buy point in its current trend (pictured below), as well as receiving some support from the psychological barrier near 1.4200. This also lends credence to the notion of a bullish Euro.
In closing, it should be noted that the EURGBP pair is in a consolidation trend which means it may face a sharp break from this behavior in the near future. Many technical analysts will tell you that a Pennant Formation usually suggests a continuation of a previous trend. If that is the case, the moment it is completed on this pair (EURGBP), it could jump sharply into a bullish posture and go even higher; making this moment in time one of the best opportunities to enter the EURGBP, if correct.
This last point also highlights the notion that the EURUSD may follow suit and continue rising beyond its barrier at 1.4624 and reach upwards of 1.5150 in the early months of 2010.
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