Market News & Analysis


Top Story

EUR/GBP poised for a rebound after 440 pips decline

Short-term technical outlook on EUR/GBP



click to enlarge charts

Key Levels (1 to 3 days)

Pivot (key support): 0.8615

Resistances: 0.8695 & 0.8790/8810

Next support: 0.8550/8470 (key medium-term pivot)

Directional Bias (1 to 3 days)

The EUR/GBP cross pair is now due for a rebound after an “overextended” decline of 440 pips from 10 Oct 2019 high of 0.9019. Bullish bias above 0.8615 key short-term pivotal support for a potential push up to target the next intermediate resistances at 0.8695 and 0.8790/8810.

However, an hourly close below 0.8615 invalidates the short-term bullish scenario for a continuation of the slide to test the medium-term pivotal support 0.8550/8470 (also the major range support in place since Dec 2016 low.

Key elements

  • From 16 Oct 2019 minor swing high area of 0.8695 to 21 Oct 2019 low of 0.8578, the cross pair has evolved into a minor “Descending Wedge” configuration. The “Descending Wedge” chart pattern tends to indicate the end of a downtrend (minor) since it is being detected on the hourly chart where the magnitude of the “lower lows” is less than the magnitude of the “lower highs”. These observations suggest the bears have started to lose momentum to push prices lower.
  • Elliot Wave/fractal analysis also indicates the potential exhaustion end of the aforementioned minor downtrend from 10 Oct high to 21 Oct 2019 low where a 5th wave 0.764 Fibonacci projection coincides closely with the 21 Oct 2019 minor swing low area of 0.8575 by measuring the decline from 10 Oct high to 11 Oct low projected from 14 Oct 2019 high on the hourly chart.
  • Prior to the bullish breakout seen on the hourly RSI oscillator, it has shaped a bullish divergence signal while price action of the pair has continued to shape corresponding “lower lows” from 16 Oct to 21 Oct 2019. In addition, the daily RSI oscillator has just exited from its oversold region. These observations suggest the short to medium-term downside momentum has eased.  
  • The significant intermediate resistance of 0.8790/8810 is defined by the minor swing hig area of 14 Oct 2019 and the 50% Fibonacci retracement of the recent steep decline from 10 Oct low to 21 Oct 2019 low.

Charts are from eSignal


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.