GBP/USD, EUR/USD: Revisiting Long-Term Charts
eFXnews | Aug 22, 2014 05:18AM ET
As the USD begins to strengthen across the G10 board, CitiFX Technicals update some of the long-term charts for GBP/USD, and EUR/USD.
In GBP/USD, Citi notes that the overall price action is still very similar to that seen throughout the 1990’s
"Recently we have turned from 1.7192…similar to the turn seen in 1998 from a high of 1.7178. What happened next was a fall to 1.5939 over 4 months before consolidating (and then we went lower still)," Citi clarifies.
"That is interesting because it is more or less where the 200 week moving average now comes in. A breach of the 55 week moving average at 1.6465 on a weekly closing basis would need to be seen before confirming the next bearish break," Citi argues.
On the weekly chats, Citi notes that GBP/USD continues lower and is likely to test the 55 week moving average and horizontal support levels at 1.6460-65.
"A weekly close below there may well open the way for a move to the 200 week moving average at 1.60 with interim support levels at 1.6381 and 1.6309. Given the general strength of the USD and Carney’s ongoing “U” turns, we would not be surprised to see the downtrend continue here," Citi adds.
In EUR/USD, Citi notes that it has breached the base of the recent range and the support level at 1.3295.
"The next support is at 1.3105 (Sept. 2013 low)," Citi notes.
"The two important lows from last year at 1.2745 and 1.2755 (the levels from where we set a platform for a decent rally) are likely to be tested over the coming months, probably by year end," Citi projects.
In line with this view, Citi maintains a short EUR/USD position as a long-term trade from 1.3731, targeting a move to 1.2750.
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