Friday, October 31, 2014

EUR-GBP Technical Analysis (31 October 2014)

MACD Settings:- First EMA = 12 | Second EMA = 26 | Signal EMA = 9
Stochastic Settings:- Period = 5 | Average Period Fast = 7 | Average Period Full =7
Bollinger Bands Settings:- Average = 20 | Standard Deviation = 2
Date: 31 October 2014
Time: 2:55PM (+8 GMT)

EUR-GBP
Technical.Indicators 4 Hourly Daily Weekly Monthly
MACD DOWN DOWN UP DOWN
Full Stochastic DOWN UP DOWN DOWN
Bollinger Bands BOTTOM MIDDLE BOTTOM BOTTOM
Chart Formation Head/Shoulder Head/Shoulder Falling Wedges Falling Wedges
Market Direction DOWN NEUTRAL NEUTRAL DOWN
Market Comments Short Term = DOWN SIDEWAYS
Intermediate Term = Sideways
Long-Term = Down

Based on technical MACD and Stochastic indicators signal, the short term movement of the EUR-GBP indicate a downturn with the possible target at 0.7771. This is supported by the sign of head and shoulder formation at the 4 Hourly. In Daily time frame there is a contra-direction between the MACD and Stochastic resisting the falls keeping it moving sideways rallying at the current position 0.7868, this create a possibility of sideways fluctuation within the range of 0.7771 (bottom) and 0.8019 (top).


Let's see what are the sentiment indicators data based on traders open position on the EUR-GBP. In the short-term SSI indicator shows a mix of data between the providers where OANDA 65.3% open position are buying and Forex Factory 53% and Saxo Bank 60.04% are selling.




Sentiment Index ProvidersBuy SentimentSell Sentiment
Forex Factory47%53%
OANDA65.3%34.12%
Saxo Bank39.96%60.04%

As MACD and Stochastic is moving against each other - the intermediate term opens up the possibility to move sideways gradually initiating correction which is unlikely as the chart already complete 3 major peak cycles. However not to underestimate the market if re-tracement should happen then 0.7990 should be the most ideal level to hit.



In the long-term perspective we can see obviously 3 falling wedges which means the downfall cycles is completed. There is no historical correction level left that we can see on the monthly chart. Furthermore the MACD and Stochastic is also synchronized downwards which means the only way is going down. The Euro currency has been dominating against the Pound Sterling for 8 years since 2006, and this time on-wards could be the GBP era to take charge with the target direction at 0.6798.


That's the conclusion we can make based on the historical data of the EUR-GBP movement in the long-term. But not to forget a new economic landscape could change the whole situation as there is a sense of indication that MACD and Stochastic are wearing out. This could trigger a temporary/permanent upward movement.

Historically the Eurzone and Britain interest rates are moving in synced for many years since the introduction of Euro currency. And for that reasons chart movement of EUR and GBP against other currencies i.e. USD, GPY, etc are identical. The slight differences of the movement can be seen on the EUR-GBP graph.