I was looking at the EUR/GBP earlier today and I spotted a few clues that this pair may be headed a lot lower in the coming months. As we know, the GBP and the EUR have been gaining strength against the USD recently, but the GBP has also been gaining strength on the EUR as well and this particular trend is likely to continue in my opinion.

Let’s look at the evidence that a major fall in the EUR/GBP could be about to happen.

Firstly there’s the fact that the price has recently crossed below the 200 day moving average (both the simple and exponential moving average) which is the first time this has happened since October 2008.

Secondly if you apply fibonacci analysis to the long-term chart, and more specifically from the low point at the start of 2007 to the high point in December last year, you will see that so far we haven’t even touched the second point of resistance yet which is the 38.20% retracement level at around 0.8555.

Therefore if the retracement continues the price is likely to at least test the 50% level, which currently stands at 0.8169, and may even fall to the 61.80% retracement level, which would see the price fall to 0.7784.

Finally if you are a fellow-subscriber of Marketclub, you can see that their trade triangles have just created a sell signal on the monthly charts at 0.8650 which is usually a very reliable signal, particularly on the forex pairs.

So overall there are of course no guarantees that the EUR/GBP will fall at all, but all of the signals mentioned above suggest that a big price fall could well be on the cards in the coming weeks and months.

tip from the forexarticles