The One That Got Away

The $EURGBP has been rangebound between 0.8600 and 0.8470 for 10 weeks. While impressive, this is not uncharacteristic of this currency pair. When it fell below 0.8500, it lingered at the bottom of the range for 3 days. I expected a continuation to the downside after the 3rd day of still pivoting around, and mostly below, 0.8480. I bailed out of a long position hours before the $EURGBP finally broke to the upside respecting the range.

EURGBP daily chart

Now, the pair is at the top of the range moving as high as 0.8575. As long as price closes daily below 0.8600, the range remains intact and we’ll see a move back to 0.8500. This time, I will be more patient.

 

GBPAUD Finds A Top

The $GBPAUD breakout has been epic. It was one of those amazing rides that you only participate in in portions. There is not a trader who captured every single pip of this move. There are many who did, however, rake in a killing take portions of this gigantic trend wave that broke out to new 2-year highs.

GBPAUD WEEK CHART

Looking at the weekly chart, it is interesting to note that this is only a 1st bullish wave. Now after 10 bullish weeks, we are starting to see a pullback. The RSI is severely overbought and has been for several weeks now. So a top was not only inevitable, it was necessary.

GBPAUD 4HR CHART

Watch 1.6380 today. Price has bounced from this support level before. If we can get below 1.6380, then price will move toward 1.6270, the 50% Fibonacci level of June’s rally and previous support. From there, price will confirm this new AUD bear trend or allow for a deeper correction still.

 

Sterling Digest, June 11 2013: sterling recovery

Cartoon from Leadbelcher on flickr
Was King right? We’ll never know.

Sterling has broken out across the board to new highs in an amazing display of strength. Last week’s BoE decision to keep monetary policy unchanged was a huge boost for sterling. It was also the last BoE meeting under Governor Mervyn King. King has drawn criticism from many market participants especially since the dawn of the 2008 financial crisis. The irony, however, is that the UK economy may be enjoying a recovery just as he retires and steps down.

Image credit