The value of one Euro in British Pounds (EUR/GBP) has been rising, from a low of £0.7700 in mid-October to an all-time high of £0.8414 traded on Wednesday, a day where the rate made a 'very big' one-day gain with a 'very large' range. The rate closed (New York close) at £0.8355.
Q: How has the EUR/GBP performed in the past when it has seen a 'very big' one day percentage gain that is more than two standard deviations stronger than the average one-day percentage move over the last six weeks, and this coincides with the rate trading at a new 13-week high?
A: According to the nine previous occurrences of this event, EventEdge indicates that EUR/GBP has shown a very strong bullish edge that peaks 44 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, Nov. 12, 2008) is Friday, Jan. 16, 2009. EUR/GBP rallies in 100% of the cases (9 of 9) by an average of 2.3% relative to the close on the event date. The overall return of the nine cases is 2.3%, which, based on the close of EUR/GBP on the event date (£0.8355), provides a target price of £0.8547.
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Gibbons Burke is editor of MarketHistory.com.
