The long term outlook of EUR/GBP is bearish. We are currently in a down trend that started July 2011 at 0.90700 with a recent low of 0.822. For the last couple of months EUR/GBP has developed some strong key support and resistance levels that with a valid breakout will confirm the next move.
EUR/GBP right now seems to have broken the ascending trendineline that has been a base for support 4 times now. We are currently waiting for a valid breakout. Upon breakout we will assume that the fall from the high of 0.8504 has resumed. With the next key support level being the recent low of 0.822. Further more a break below 0.822 our next target would be 0.806 which is the low of 2010. These down trend movements are all in line with the the long term down trend from 0.90700 (July 2011) to the new recent low of 0.822
To the upside we are looking for a break above 0.90700. This would turn our status on this pair to bullish. This would indicate that the whole down trend from the high of 0.9800 to the recent low of 0.822 is now over.
What do the labels mean in chart?
Red line - Support Level.
Green line - Resistance Level.
Arrows - Represent key points in the formation. If its a head and shoulders formation I will place arrows at the shoulders and head.
Thumb - When the price reaches near the thumb that is when we need to look for clues to enter.