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Forex Help Forum Archive for 09/24/2009
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GVI Forex Jay 10:12 GMT September 24, 2009
Subject: The Importance of Crosses in Spot Trading
EUR/GBP daily chart posted above - breakout through .9082
See full update below.
GVI Forex Jay 10:11 GMT September 24, 2009
Subject: The Importance of Crosses in Spot Trading
The purpose of this thread is not to analyze GBP but to illustrate the impact of crosses on spot trading. Today GBP/USD is sharply lower while offsets out of sharply weaker GBP crosses are helping to weaken the dollar elsewhere.
GBP/USD has fallen sharply today and one look at any GBP cross chart will show where the selling is coming from. We have been focusing on EUR/GBP so will post that chart but its losses are more pronounced in EUR/JPY. The catalyst were comments from BOE Governor King said a weaker sterling was helping to rebalnace the UK economy. This is similar to comments made earlier in the week but as you can see by the 5 minute EUR/GBP chart (above), it caught the market by surprise or leaning the wrong way. In any case, the reaction to news always tells more about the market than the news itself.
I posted this on GVI Forex over the weekend and worth re-posting here after the breakout through .9082.
GVI Forex Jay 09:42 GMT September 20, 2009
eur/gbp .95?: Reply
I have seen forecasts calling for a higher eur/gbp targeting 95 and parity (1.00). I am not so bold to make such a prediction and only looking at what the charts show. All I know is that eur/gbp has broken out to the upside and should .9082 be firmly taken out, it would expose a risk for .95 as the next key target. These are the key resistance levels from the chart posted above:
.9082 (Apr 24. 2009 high)
.9418 (Mar 27, 2009 high)
.9501 (Mar 18 2009 high)
.9520 (Jan 26 2009 high
.9803 (Dec 30 2008 high)
Here are some scenarios for reaching .95:
eur/usd 1.55 / gbp/usd 1.6316
eur/usd 1.50 / gbp/usd 1.5789
eur/usd 1.45 / gbp/usd 1.5263
eur/usd 1.40 / gbp/usd 1.4737
It is simple algebra. If eur/usd stays within 1.45-1.50, gbp/usd would need to trade somewhere within 1.5263-1.5789 to reach a .95 target. You can work other potential levels for the eur/usd and corresponding gbp/usd rates but can see from the above scenarios, the risk for gbp/usd should the market make a run at eur/gbp .95
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