EUR/GBP Braces for a Possible Price Correction –Euro to British Pound Forecast
EUR/GBP Technical Forecast
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EUR/GBP – Hesitant Sellers
Last week, sellers resumed bearish price action and led EUR/GBP to close the weekly candlestick with 1.2% loss. On Monday, the pair declined further and printed 0.8393 – its lowest level in over seven months. However, the price rallied after, then closed with a bullish Doji pattern, highlighting seller’s indecision at this stage.
The Relative Strength Index (RSI) rose from oversold territory reflecting a slowing down downtrend momentum.
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EUR/GBP Daily PRice CHART (Jan 1, 2018 – DEC 11, 2019) Zoomed Out
EUR/gbp Daily Price CHART (April 19 –DEC 11, 2019) Zoomed in
Looking at the daily chart, we notice on Dec 4 EUR/GBP tumbled to a lower trading zone 0.8497- 0.8400. This week, the price dipped below this zone however, rallied back later as some sellers took profit
A close below the low end of the zone could encourage more sellers to join the market and press EURGBP towards the vicinity of 0.8312-04. In that scenario, a special attention needs to be paid to the weekly support levels underlined on the chart as some sellers could exit the market at these points.
That said, a close above the high end of the zone would reflect more seller’s hesitation. This could correct the price higher and open the door for buyers to push the price towards 0.8627. Nevertheless, the daily and weekly resistance levels marked on the chart should be considered.
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EUR/GBP Four Hour PRice CHART (April 15, 2017– DEC 11, 2019)
From the four- hour chart, we notice that EUR/GBP may be on course to develop the right shoulder of inverted head and shoulders. This suggests if the price breaks and remains above 0.8463 the pair could rally eyeing a test of 0.8529.
A break above 0.8497 could cause a rally towards 0.8529. Yet, the daily resistance level underlined on the chart should be watched closely. On the other hand, a break below 0.8389 may send EURGBP towards 0.8331. Although, the weekly support level underscored on the chart should be kept in focus.
See the chart to know more about key technical levels the price would encounter in a further bullish scenario.
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Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.