EUR/GBP Picture Not Yet Clearly Bullish

Following new 2011 highs recently the EUR/GBP cross rate has slipped back from long term resistance. Key supports are coming under scrutiny, the first of which being a 38.2% pullback level.

• WEEKLY CHART: The earlier breach of falling resistance looked to be a positive sign but note how the old rising support/return line (underside of an old triangle) resisted bulls’ advances. It is not yet clear if bulls have a clear advantage –note that support has so far come from the 38.2% pullback of the whole recovery from Jun-10 0.8065 low. A break below this would be an initial negative signal.
• DAILY CHART: The slip back from the rising resistance line is not far off key supports here. Besides the 38.2% level from the Weekly chart note the s/term channel base projection at 0.8650 ahead of the 0.8606 26-May low –violation of these would be negative and at least postpone new 2011 highs.

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