EUR/GBP - Slipping Through Short-Term Support, Multi-Week Low Nears
EUR/GBP Price, News and Analysis:
- Technical set-up looking negative.
- IG client sentiment also suggests lower prices.
EUR/GBP is competing against a cluster of resistance levels and looks likely to move lower if these hold firm. The pair are trading either side of the trend resistance and trend support apex, and a close below this support, and preferably the 38.2% Fibonacci retracement level at 0.9035, may usher in a period of lower prices.
The 20-day simple moving average has broken below the 50-day sma, a bearish sentiment set-up, and both of these two moving averages – 20-dma at 0.9072 and 50-dma at 0.9087 – will also act as short-term resistance. The longer-dated 200-dma is currently close at 0.8951 and a break and close below here will also add to the bearish market outlook. Below here, the 50% Fib retracement at 0.8891 and the September 3 multi-week low at 0.8865 will likely be targeted.
Any bullish reaction is expected to run into resistance between 0.9148 and 0.9165.
From a fundamental outlook, news from the EU/UK trade talks will likely drive the pair. EUR/GBP is a good barometer on how talks are progressing and any suggestion that a deal is on the cards will send the pair lower. On the flip side, if EU/UK trade talks break down, then the pair will quickly press against the resistance levels mentioned above.
EUR/GBP Daily Price Chart (February – October 28, 2020)
IG Retail trader data show 54.44% of traders are net-long with the ratio of traders long to short at 1.19 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall. And traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/GBP-bearish contrarian trading bias.
What is your view on EUR/GBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
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