EURGBP at Key Inflection Point Ahead of BoE- Something's Gotta Give
- EURGBP testing key resistance confluence- Broader outlook constructive
- Updated targets & invalidation levels
- Event Risk on Tap This Week
Chart Created Using FXCM Marketscope 2.0
Technical Outlook: EURGBP broke above trendline resistance extending off the August 2013 high last month, with the advance now coming into a critical resistance confluence at 7542/51. This region is defined by the 2.618% extension, the broader 100% extension and the upper median-line parallel extending off the June 2015 high. The immediate topside bias is at risk below this mark with near-term support eyed at 7418 backed by 7375/86 & 7328/35 (bullish invalidation).
A breach of the highs targets subsequent objectives at 7617/32, 7713 & 7849. Note that momentum has failed at 70 with multiple support triggers pending. Bottom line- the pair is at uptrend resistance & a pullback off these levels would likely offer favorable long-entries lower down.
Notes:EURGBP has been trading within the confines of a well-defined ascending median line formation extending off the November lows with the pair now in consolidation just below key near-term resistance at 7542/51. Look for a break of this consolidation range with a break below the sliding parallel (red) / today’s lows shifting the focus towards interim support & our near-term bullish invalidation level at the lower median-line parallel / 7418. A break below this region suggests a larger scale correction may be underway with such a scenario targeting subsequent support objectives into 7328/35.
A topside breach keeps the long-bias in play with initial resistance targets eyed at 7591, 7617 & 7715/13. A quarter of the daily ATR yields profit targets of just 18-20pips per scalp so we’ll want to time our entries with a little more precision here. Added caution is warranted heading into the Bank of England Interest Rate Decision tomorrow morning with the release likely to fuel volatility in the sterling crosses.
For updates on this setup and more throughout the week, subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount!
Avoid the pitfalls of near-term trading strategies by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders” series.
Relevant Data Releases
Other Setups in Play:
- NZDUSD Testing Slope Support- Rebound to Offer Short Entries
- Webinar: EUR, AUD Pose Brisk Start to the Week- Crosses in Focus
- AUD/NZD Slope ofInfluence Highlights Key Inflection Point
- EUR/USD Short-Term Strategy: Sell Rips Sub-1.0880
- NZD/JPY Testing Support- Outlook Remains Bearish Sub-81.40
---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.