Traditional technical analysis for a wedge says you take the high at the start of the wedge (Dec08 - 0.9802) to the low of the first swing (June09 - 0.8399) and project that distance from the breakout point.
So if we breakout here around 0.8680 then the projected target could be 0.7277, which sounds wild but looks very reasonable on a weekly chart.
That kind of lines up with the 78.2 fib retracement from the 07 lows to the 08 highs.
I would expect a bounces at 0.8180 and 0.7785
I think a lot of traders have been looking at this chart. It might be the reason cable has been so well bid.
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EG should go down Nic. For the life of me I couldn't understand why this was at 88 from a while when EU itself is about to collapse!! Now it's taking shape atleast...
ReplyDeleteI mentioned this already few posts ago if EG is this strong now wonder what will happen when europe is stablized (not a chance in hell), should it be going to parity with the pound, nope. Collapse of euro will give boost to the pound and it will drop like a rock. Hedge funds are ready to slaughter the PIGS which will be the end of euro.
Hi Ams
ReplyDeleteYeah, you saw this before me. Hedge funds smell blood, I bet Hugh Hendry is chuckling in his capuccino today.
Playing devil's advocate here....
ReplyDelete(a) UK has a horrendous deficit.
(b) A hung parliament may have repercussions for the ability of the govt to take the necessary austerity measures
(c) Greece is insignificant in the greater scheme of things. Short eurgbp is heavily relying on Spain coming under pressure
I hear you Colin.
ReplyDeleteI don't see deficit as such a big problem while UK still has a printing press it controls.
The hung parliament could be a problem tho ...
I do think market will test Portugal and Spain and Italy too.
If EURGBP gets to 84 then it has regained 61.8 of what it lost following Lehman/credit crunch which is my target.