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EUR/GBP Price Forecast - Rangebound For Now But Support May Soon be Tested

EUR/GBP Price Forecast - Rangebound For Now But Support May Soon be Tested

Nick Cawley, Strategist

Euro and British Pound (EUR/GBP) Price, News, and Analysis:

  • EUR/GBP slipping below 0.8600 again.
  • Range support continues to come under pressure.

We have been following EUR/GBP closely for a few weeks, highlighting the multi-week trading range that has kept the pair in check. This range has narrowed recently to 0.8561/0.8672 from the original range of 0.8561/0.8721 as sellers appear at the higher levels. This is shown on the daily chart by a series of lower highs off the late-April peak. While lower highs are important to watch, to get a clearer bearish picture they should be accompanied by a clear series of lower lows, which is not happening in this case. This range tightening has also caused volatility in the pair, measured using the 14-day ATR indicator, to fall to multi-month lows.

It remains to be seen if this range is broken in the near term but, all things being equal, if there is to be a breakout, then it looks increasingly likely that range support is more likely to crack than resistance.

EUR/GBP Daily Price Chart (November 2020 – June 16, 2021)

EUR/GBP Price Forecast - Rangebound For Now But Support May Soon be Tested

IG Retail trader data show 58.92% of traders are net-long with the ratio of traders long to short at 1.43 to 1. The number of traders net-long is 19.01% lower than yesterday and 2.28% lower from last week, while the number of traders net-short is 20.81% higher than yesterday and 5.14% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/GBP price trend may soon reverse higher despite the fact traders remain net-long.

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.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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