I love it when a plan comes together – last time I wrote ‘…we had a very bullish move last Friday, the close was right on the Key 50% Fib of the Sep – Oct move at 0.7137, so it was bullish but there was also room for doubt.’. The next three days after, we saw a rally in EUR/GBP but then it petered out (…room for doubt…) and prices fell down to make the Nov lows whilst also confirming the third point in a three point Uptrend from Sep (currently 0.7060).
This then projected prices higher and at time of writing we have two bullish Golden Crosses on the MAs and a very rare bullish Double Consecutive Key Reversal Up on the Daily Chart. That ought to be good enough but one the KRs Up is also an Indecisive Long Legged Doji Cross, admittedly a bit bullish but on the face of it Indecisive. Additionally, prices have run into the key resistance band 0.7370 – 0.7383 consisting of a 50% Fib, the Oct high & another Fib…and that is where we are.
So what next?
Well, we have further resistance above at 0.7526 (50% Fib) plus dynamic resistance in the form of a descending Long MA (currently 0.7456). Support on the other hand is well below at the 50% Fib at 0.7137 plus the Uptrend previously mentioned. It would seem likely that we may have another try on the upside but given the nature on previous attempts at the 0.7370 – 0.7383 area it would seem this time likely to fail and we move lower. I said ‘…this time…’ because we have had a number of bottoming formations on the Daily Chart above plus the renewed Uptrend may be starting to form an upward Triangle formation of some form.
Hence, any declines, as long as they keep above the Uptrend on consecutive closes, could be seen as accumulation of ammunition for a try higher. With MAs mixed, I’ll move the bullet point into neutral as both higher and lower have reasonable arguments and I would rather find further evidence for any try in a specific direction.
ADM Investor Services International Limited is authorised and regulated by The Financial Conduct Authority. Member of The London Stock Exchange. Registered office: 4th Floor Millennium Bridge House, 2 Lambeth Hill, London EC4V 3TT. Registered in England No. 2547805 a subsidiary of Archer Daniels Midland Company. Risk Warning: Investments in Equities, CFDs, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value, investors should therefore be aware that they may not realise the initial amount invested, and indeed may incur additional liabilities.
These Investments may entail above average financial risk of loss, and investors should therefore carefully consider whether their financial circumstances and investment experience permit them to invest and, if necessary, seek the advice of an independent Financial Advisor. Some services described are not available to certain customers due to regulatory constraints either in the United Kingdom or elsewhere. © 2014 ADM Investor Services International Limited 2014.