A Strong Breakout but Will the Rally Continue?

This week, we turn to the EURGBP, a pair that we have been bullish on for some time and wrote about in January and March. The EURGBP has broken higher from a long consolidation and is trading at its highest level since January 2005. Will the rally continue?

This week, we turn to the EURGBP, a pair that we have been bullish on for some time and wrote about in January and March. The EURGBP has broken higher from a long consolidation and is trading at its highest level since January 2005. Will the rally continue?


The EURGBP has broken through and is testing the 100% extension of .6535-.6867/.6679 at .7011. This level is likely to provide some resistance for the next few weeks as this market consolidates gains. Ultimately, we expect a test of the 161.8% extension at .7216 in wave iii of the 5 wave bullish cycle that began at .6535. This level is very close to the 2003 high of .7254.


This is a 480 minute chart that shows in detail the rally from .6679. The rally to .7019 most likely completed wave 3 within the short term 5 wave bull from .6679. Expect an expanded flat correction to complete next week below .6952 before a rally to a new high (above .7019) completes 5 waves from .6679. A few weeks of consolidation is likely to occur at that point before the next leg higher. So, the answer to the question; Will the rally continue? is yes, but first expect consolidation with support just below .6952. Every Monday, technical analysis of the Euro major crosses are published. We will keep readers abreast of what we see unfolding.