Top in Eurgbp
How long it will hold is still in question, but two patterns, one on a weekly chart going back to March of 2007, and one shorter term going back to last November, coincided with a fibonacci area of attraction aroung 0.7970-0.7980.
First the longer term pattern which was dealt with previously in three posts in January here, here and here. Eurgbp had topped out around 0.7250 in May of 2003. From then through January of 2006 it traded in a wedge pattern, with a descending trendline causing each rally attempt to fail beneath the previous high.
Then in late September the market broke above the descending trendline.
With the rally and retracement seen right before this breakout as alpha and beta, the following pattern unfolded.
Once the impulsive rally off of the beta low broke through the downtrend line, the 1.618 delta level was the first area of resistance, with the former downtrend line now forming support. The next impulsive move seemed to bring the market to a level that gravitated around the 2.618 level (rather than that level providing resistance). The same situation occurred after the next impulsive rally, with the 4.236 delta level providing a center of gravity for a month or so of range trading. Then another impulsive rally and a top around the 6.854 level.
The second pattern begins with an alpha at the top above 07600 in mid-January of this year. A beta near the end of the month projected a 2.618 delta target that converged exactly with the 6.854 delta of the longer term pattern.
