EURGBP Price: Facing a Cluster of Resistance Levels
Euro and GBP Talking Points:
- Fibonacci retracement and 200-day moving average near.
- Channel break-out may boost the pair.
The DailyFX Q4EURand GBP Forecasts are available to download.
EURGBP – Top of the Channel
EURGBP continues to re-trace recent losses now trades at the top of the trading channel, started off the August 26 high at 0.90987. The pair have bounced off the October 10 low at 0.87233 and currently trade at 0.88230, the top of the channel. The pair are close to a cluster of resistance points that may be difficult to overcome, especially with both sides fundamentals remaining weak and cancelling each other out.
First up, the 200-day moving average currently sits at 0.88379, just above the channel, just before 0.88480 comes into view, the September 20 low and October 5 high print. After this the 50% Fibonacci retracement level at 0.88597 comes into play. On the downside, the 61.8% Fibonacci retracement level at 0.88033 offers the first line of support.
The fundamental back-drop for the pair sees the single currency still waiting for the outcome of the EU/Italy budget discussions - and the central bank meeting on Thursday – while Sterling remains under pressure as Brexit talks seemingly go nowhere. There is conflicting news currently floating around the market with the UK on the one hand seemingly shifting its position on the Irish backstop, while others report that UK PM Theresa May’s looks increasingly untenable.
EURGBP Daily Price Chart (March – October 22, 2018)
IG Client Sentiment Datashow that retail investors are 47.5% net-long EURGBP and coupled with recent changes, this gives us a stronger bullish contrarian bias.
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