EURGBP Bull Trend Underway Towards .7200


[B]Commentary[/B] - We wrote last week that “the risk of a reversal is high as there are 5 waves up from the June 2005 low. There is a chance that an ending diagonal ended at 168.94. A decline below 166.51 would confirm a reversal and warrant a bearish bias. Until then, higher prices remain possible.” The EURJPY broke below 166.51 last Tuesday and went into freefall as the pair now trades below 162.00. Near term, a small correction could reach the 38.2% of 168.86-160.65 at 163.79 before the next leg down. Medium term, the initial bearish target is 150.73 (March low).
[B]Strategy [/B]- Remain bearish against 168.94 (should be in close to 166.50), targeting 150.73

[B]Commentary[/B] - The decline that we were looking for did occur, but not before a new high was established (above 1.6671). Initial support has been tested (1.6418) and a bounce towards 1.6490 is likely underway. If 1.6413 holds up, then a return to the 38.2% of 1.6686-1.6413 at 1.6517 is possible as well.
[B]Strategy [/B]- Look to get bearish close to 1.6517, against 1.6686, target TBD

[B]Commentary[/B] - We wrote last week that “we expect a strong rally to begin in the weeks ahead along. A new low (below .6707) is possible but .6535 must remain intact in order for the longer term bullish bias to remain favored. Potential support on a decline below .6707 is the 61.8% of .6535-.6867 at .6662.” The EURGBP dropped to .6679 last week but now sits above .6750. It is our contention that the longer term bull market has returned and that the EURGBP is headed much higher (an objective is at .7216) in the coming weeks and months.
[B]Strategy[/B] - Remain bullish, against .6679, targeting .7216