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EUR/GBP: Correction over?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 25, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Córdoba) - The euro is rising against the pound at the beginning of the week after three days of corrections. EUR/GBP peaked last week at 0.7755, hitting the strongest level in a year and then retreated. Today is rising again but modestly.

    EUR/GBP back above 0.7600

    From the top the pair lost 230 pips and bottomed at 0.7520/30 (Jan 22 low) from where it bounced to the upside. Today the pair moved with an upside bias all day; it peaked at 0.7610 during the European session and on American hour remained above 0.7600 and near the highs but it failed to break above.

    So far, it is not clear if the correction is over. EUR/GBP rose back above 0.7600 but it failed to rally above. If the pair drops back below 0.7575, where the Fibonacci retracement of 23.6% is located it could extend the decline to 0.7500 - 0.7475, where the 20-day MA and the 32.8% retracement area located. That area is likely to offer strong support.

    On the upside, the euro could gain momentum above 0.7615. On a wider perspective, the key resistance is around 0.7750 (2012 lows), that limited the upside last week.
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