Euro and Pound Weekly Overview - September 09 close

EURUSD

The weekly support at SMA34 and 38.2% retracement level failed to hold for the Euro-Dollar and the price broke further down, closing at the 61.8% Fibonacci level. Since the beginning of this week, it has reached below the daily 138.2% extension on the previous swing low, and we could expect a continuation of the bearish move towards round number 1.3400 as a first target (daily 161.8% extension), the next step being around 1.2900 on a medium-term view. Some correction in the direction of Friday’s close (1.3660) could be expected to close the gap, and might push further up to retest the break of previous support level at 1.3840/50, a good entry price for further downside to the above-mentioned targets.

GBPUSD

The Pound-Dollar fell as expected, almost reaching July lows and 161.2% extension as of last week: price is presently trading below round number 1.5800 and very close to that support level. We sustain the view of the weekly Head and Shoulders formation, targeting 1.5350/1.5000 medium-term; on the daily charts the moving averages have started pointing down and SMA200 has been neatly broken, however we should be wary of a bounce and double bottom from the actual level (1.5790).

EURGBP

Due to the Euro greater weakness, our bullish targets on this pair did fail. The Euro-Pound indeed broke the confluence of the moving averages on the weekly charts, testing as expected the bottom line and 61.8% retracement reaching just below 0.8600. This week’s gap brought the price below the 138.2% Fibonacci extension level and presently looks like it is being rejected (most probably to fill the gap) to the upside. We can expect a correction to the previous support for a retest (0.8640), which is also today’s daily pivot point. Given that the rejection has taken place at the ascending weekly trendline level, I would vouch for a bullish outlook, at least to the above-mentioned level, and further upside to the previous lows and confluence of daily SMA34 and SMA200 at around 0.8730.