Forex Depth Analysis: EUR/GBP

Daily Forex Technicals | Written by Finotec Group | Oct 17 08 09:20 GMT |

Investors should buy the British pound against the euro as the Bank of England will cut interest rates faster than the European Central Bank to battle slowing growth, RBC Capital Markets analysts said.

'Policy making in the U.K. is likely to look like a speedboat compared to the European supertanker going forward,' wrote a team of analysts including Toronto-based David Watt, a senior currency strategist at RBC, in a research note yesterday. 'Difficulty in reaching a consensus will stop the ECB delivering the rapid and aggressive cuts the economy needs.'

The following technical analysis gives us a detailed lookout on what is expected to happen to EUR/GBP.

The buying point is at 0.7840; based on a break of a strong resistance.

* Fibonacci 61.8% is the take profit at 0.7943
* Previous support is the stop loss at 0.7736

The selling point is at 0.7759; based on a clear downtrend.

* Pivot point is the take profit at 0.7691
* Fibonacci 23.6% is the stop loss at 0.7815

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of MACD line to the signal line and breaking of equilibrium level. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a downtrend.

The ROC oscillator is very important to understand the demand in the market and as we see on the graph it breaks the zero level. The stochastic oscillator crosses %D line and gives us a bearish signal.

* The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.

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Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.