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