#Brent #DAX Sometimes this pair defies any sort of logic but, as projected last month (link here), the relationship indeed met criteria and founders from the 1.17 level down to the 1.12 level. We suspect, given the calibre of politicians involved, this was almost like predicting rain in Scotland – inevitable.
At present, the pairing needs above 1.13 just to exceed the immediate pace of descent but we shall be more interested only if it somehow exceeds 1.14 and rises to 1.1503. While fairly insignificant, things get a little more interesting if 1.153 is bettered. This will tend imply some strength is present, indicating the potential of growth toward 1.169 next. Calculating above 1.169 is a bit dodgy but the key trigger level for “proper” movement of 1.20 still appears viable.
We’re occasionally mentioning “on the first surge” to highlight something useful about our target levels. For instance, the graphic above highlights that on May 31, GBPEUR achieved our 1.1285, even closing the session at exactly this level. But importantly, during the session, it broken below to 1.1268. In plain English, this created a scenario where regardless of what followed, our secondary drop target became viable.
The situation now is fairly plain as anything now below 1.12 looks very capable of travel down to an initial 1.1092 next. Secondary, if (when) broken on the first surge is at a bottom, hopefully, of 1.085. In conventional circumstances, we’d already feel comfortable assuming GBPEUR is already heading down to the 1.085 level. Below such a point will require another hard stir of the tea leaves.
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