FX.co ★ EUR/GBP candlestick analysis for June 1, 2011

The EUR/GBP currency pair is rolling back after it succeeded to break the 0.8650 support and the Fibonacci 50.0 correction level.
Earlier in a daily graph the EUR/GBP formed a Long Shadows candlestick indicating further downside movement, confirmed further.
This candlestick shows that earlier the EUR/GBP pair made a strong upside movement after an unsuccessful attempt to break the support level 0.8300. However, it reversed near the 0.9000 level. This means that the bulls could not solidify here and the bears started to increase their influence.
The divergence on the RSI and the MACD supports the downside movement.
Break of the Fibonacci 23.6 correction level proves this viewpoint.
As mentioned earlier, if the Fibonacci 38.2 correction level is successfully tested, we should expect downside movement with a target at 0.8650 where the Fibonacci correction level 50.0 is also located. Its break will target the pair to the next support level 0.8350.
It is worth mentioning that stop orders should be placed slightly above the resistance level 0.8840 as its break will target the pair to 0.9050.
In the medium term, the rollback from 0.8067 is completed with 3 waves at 0.9041. Current correction means the decline from the 0.9799 (2008 high) is continuing with a target to refresh lows below 0.8067. Break of the support level 0.8650 will prove this point of view and lead to downside movement to 0.8284. Its break will target the pair to 0.8067.
Nevertheless, break of the resistance level 0.9050 will denote that the short-term correction from 0.9799 is completed with 3 waves at 0.8067. In this case, the long-term downtrend initiated in 2000 will be probably continued to refresh highs above 0.9799.