EUR/GBP: Showing early signs of slowdown in momentum - SocGen

Research Team at Societe Generale, suggests that after having met the projected target for the double bottom at 0.81/0.8150, EUR/GBP is showing early signs of slowdown in momentum.

Key Quotes

“Level of 0.81/0.8150 also gains importance as it happens to be the upper limit of the descending channel within which downtrend since 2008 has evolved and the 61.8% retracement from 2013 highs. Recoveries have typically been ranging between 7 months to a year thus timing ratios also indicate that recovery which started in last July may be nearing completion. Monthly RSI is testing a multiyear graphical resistance where historically sharp retracements have occurred; hence a high probability of turnaround exists from here.

Short term, the pair could form a near weekly bearish engulfing pattern further confirming waning of upside momentum, with daily indicators giving a negative crossover from multi month ceiling a down move initially towards the daily channel at 0.7880 appears likely and even towards 0.7830, 23.6% retracement from July lows. A break below 0.7830 will lead to a retest of March lows at 0.7650.”