SHORT-TERM CORRECTIVE RALLY ANTICIPATED; LOOK TO BUY
Eur/Gbp: While our longer-term outlook has been quite bearish on the cross since the start of 2009, our shorter-term view is contrasting, with daily studies showing oversold and in need of a healthy corrective bounce. The market has once again descended to fresh 2009 lows on Monday, but we look for any additional setbacks to now be well supported below 0.8400 as the market trades into a previous congestion zone from November 2008. The daily RSI trades just above the critical 30 level which has rarely been breached over the past several years to further strengthen our bullish case. The ATR (Average True Range) projected low comes in by 0.8370 on Monday and we will look to buy just ahead of this level if given the opportunity. Strategy: BUY @0.8375 FOR AN OPEN OBJECTIVE, STOP @0.8275. Recommendation to be removed if not triggered by NY close (5pm ET) on Monday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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