EUR/GBP rejected by the top of its cloud - Commerzbank

According to Karen Jones, Analyst at Commerzbank, provides his technical outlook for the EUR/GBP cross alongside his take on the GBP/USD and the EUR/USD majors. 

Key Quotes:

“EUR/GBP’s near term strength was viewed as corrective and it appears to have already failed at the top of the cloud at .0.8677 and imoku 2 at .8660. Attention is on the base of the cloud at 0.8517, we maintain a negative bias. Below here will trigger losses initially towards the 0.8439 200 day ma and this guards the 0.8304 December low.”

“GBP/USD yesterday eroded its 55 day ma but no close was seen below here – it lies at 1.2429. Yesterdays price action was a minor reversal and caution is warranted. The market last week was rejected by the top of a channel at 1.2702. A close below the 55 day ma will introduce potential to the 1.2253 the 18th January low. Our bias is neutral to negative.”

“EUR/USD has failed on its initial attempt at 1.0820/26, which represents the 50% retracement and the top of the cloud, and has now eroded the 20 day ma. This leaves attention on the 55 day ma at 1.0602 and the base of the cloud at 1.0563. We suspect will need to go below the base of the cloud at 1.0563 to negate the current push higher and re-target recent lows at 1.0352/40. The current Elliott wave count on the daily chart suggests that this move lower will terminate circa 1.0600, however the intraday Elliott counts are far more negative.”