AUTOREFRESH 
Selling interest emerging in EUR/GBP
By Sean Lee || August 27, 2009 at 22:14 GMT
|| 3 comments || Add comment
We wrote lots in the last few weeks about a major player who had been soaking up EUR/GBP on every dip into the low .85s and now I’m hearing that the same player is looking to sell around .8860. My technical analysis earlier in the week (I’ll refresh in the next little while) suggested that the target for this leg of the upmove was .8815/35 and with the overnight high at .8840, my analysis is potentially vindicated. I stick with my view that a short-term top will form close to current levels and that we see a retracement back towards the low .87s before the next leg higher.
Hi Sean – i was wondering if you could explain your logic on the last part of this piece, ie you think that there is a next leg higher?
I too think that we will see the low .87s before long but i cant see any reason for another leg higher? Forgive me if its obvious but im pretty new to this game and learning the hard way.
Thanks
Scott
Hi Scott, the FX market seldom moves in a straight line in any direction. It is a big lumbering animal which needs space to turn. My reading of EUR/GBP is that the primary trend is up, after the 40% appreciation last year towards .95+. The secondary move is a consolidation/retracement of this move and it has taken us to .84 so far. We may well see some further retracements lower but not yet as we are now consolidating the secondary move and this has seen an initial move to .8840 ish. I think it unlikely that the market will only have this one wave move higher. It’s more likely that the market is afraid of a return to the primary trend and so will be in dip buying mode while above .84. Therefore we should see another leg higher taking us above .90 when either the bulls then get exhausted and we return to the secondary move (preferred) or we seee a full blown return to the primary bull move.
That’s great thanks, Sean. The more I learn the more I realise how little I know !