Talking Points:
- EUR/GBP trading sideways between well-defined technical levels
- Further upside conviction might need to see a break above resistance at 0.8500
- The 0.8250 level appears to be the initial focus for possible support
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The EUR/GBP is trading sideways between well-defined technical levels after the pair surged higher following the Brexit vote.
At the moment, the technical picture appears clear; further upside conviction may need to see a break above the 0.85 handle initially, which proved influential in the past, and also coincides with possible trend line resistance.
A break higher might expose the “post-Brexit” highs around the 0.86 figure before what appears to be a key area of resistance above the round 0.87 number.
A failure to move above the 0.85 handle could put the focus on the 0.8250 level for possible support, but longs may hold back from entering there without being able to achieve new highs.
If this scenario plays out, is seems likely that eyes will be on the zone below 0.81 to the 0.80 level, which also coincides with possible long term trend line support and the 0.38 Fib of the up move (as measured from the November 2015 lows), for possible reemergence of the uptrend.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 29.9% of traders are long the EUR/GBP at the time of writing. The SSI is mainly used as a contrarian indicator, implying strength ahead.
You can find more info about the DailyFX SSI indicator here.
EUR/GBP Daily Chart: July 28, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
