How close will sterling get to parity against the euro?

The pound versus the euro (FX:GBPEUR)

One of the more encouraging signals, when viewing a trend, is spotting when a price is under manual control. We come to this conclusion, generally, when the level of market manipulation eases above ridiculous. Such is the fable currently being fed by pound/euro movements. The chart below shows the last 10 years.

What we're especially fascinated by is the period from April this year to today. In April, the pairing broke trend and surged toward the 1.2 level before once again being driven back. And since April, in behaviour more choreographed than a TV reality show, the pair has very carefully slithered down the historic light blue trend.

In fact, such has been the control exerted, it seems we should expect the current drop target -1.068 - sometime around the start of October this year. This, additionally, is why we dislike forex in day-to-day analysis, as we regard the market as crooked.

As always, the question is: "Will it bounce?" And the other question should be: "What does the pairing need do to trash the drop potentials?"

Firstly, the pairing needs to better 1.1438 to remove itself from this immediate decline cycle, so there's the stop loss level. But, secondly, there's still a fairly large "last-ditch" trigger level to be achieved, and it's at 1.088.

If (when) the pairing moves below this point, our 1.068 becomes almost inevitable but so, unfortunately, does our real secondary target at 1.028. Normal rules indicate some sort of fake bounce will happen around the 1.068 point but a real bounce can be hoped at 1.028.

Finally, there's a peculiar facet of the red uptrend since 2008. For a brief period in October 2016, the pairing broke the trend, one of these fake spike down things presumably aimed to capture a bunch of folks' stop loss levels.

Our inclination has been to ignore this trend-break, but it creates the situation where this currency pairing has already broken the long-term uptrend - as of the start of last week - and, now, it's already floundering around in a zone where 1.027 can be expected to show its face.

Great for tourism to the UK and exports to Europe (gulp).

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

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