EUR/GBP rally post ECB capped below cloud, downside risk remains

FX:EURGBP   Euro Fx/British Pound
236 1 5
EUR/GBP             cross topped out around 0.7250 Thursday after big squeeze on EUR shorts after ECB disappoints markets with bare-minimum easing package

Rally in the cross post ECB was capped below the daily cloud which is encouraging enough for a resumption of the downtrend

On the day, the pair has failed once again at higher levels and dropped below 0.72 handle, is currently pared some losses and is trading at 0. 7201            

Support on the downside is thin until the 10/21 DMAs at 0.7075/0.7064, break below could open up lower levels again. Immediate resistance is seen at 0.7236 (50 % Fibo of Oct             13 to Nov 17 fall)

Markets see scope for further ECB easing in March and BoE rate hike likely in 2016. Contrasting ECB/BoE  monetary policy outlooks may keep cross largely contained below 0.7250 ( Oct             28 high)

Resistance Levels:

R1: 0.7236 (50 % Fibo of Oct             13 to Nov 17 fall)

R2: 0.7262 (Cloud base)

R3: 0.7284 (Daily Cloud Top)

Support Levels:

S1: 0.7176 (38.2 % Fibo of Oct             13 to Nov 17 fall)

S2: 0.7077 (10 DMA)

S3: 0.7066 (21 DMA)
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