Bar keeping an eye on my shorts I’ve not really had a good look at the cross for a while so it’s time to take a gander and see what’s what.
Since the breakdown from 0.8500, 0.8400 has been a pivotal level recently. We struggled to break in initially and despite doing so we haven’t managed to sustain a push lower. The move has obviously been backed by cable going on a space trip, but the downside will become limited if that move gets stretched. The 55 wma has played it’s role in containing the weekly moves for the last two weeks and so we’ll need to have a go at closing below for the chance to move lower.
EUR/GBP weekly chart 23 September 2013
We also have a short term support line coming from Feb this year at 0.8298, which is running along side the 100 wma at 0.8309 so this is likely to provide support further down.
Above we’re starting to get a nice confluence of moving averages coming together between 0.8503 and 0.8556. There’s the 200, 100 & 55 dma’s at 0.8503, 0.8539 & 0.8556 as well as the 55 mma at 0.8553. As these tighten up they should provide some decent resistance for the upside. That’s a fair way away and ahead we have the 200 wma at 0.8484 to get through closer to home.
While I still hold just under a third of my original shorts I’m wary of the bull run in GBP/USD slowing and if Europe start to post some good economic data (unlike this morning) then there could be two ingredients in the mix that may make me think about taking profit on the rest of he position. My original target around the 0.80 level looks to be a step too far and that target was all about the time frame between the UK continuing it’s recovery and Europe bottoming out of their recession. I’ll be watching the data closely to see if that is playing out and that will give me the clue as to how I will play the position.
