EUR/GBP: Eyes on Breakout Levels – Euro vs British Pound Price Forecast
EUR/GBP Technical Outlook
EUR/GBP – Bulls Pullback
On Jan 14, EUR/GBP rallied to 0.8596 -its highest level in nearly eight weeks. However, the market retreated form that level and settled below 0.8500 handle. The following week, the market retreated further and tested on Friday its lowest level in five weeks. The weekly candlestick closed in the red with a 1.0% loss.
The Relative Strength Index (RSI) dipped below 50 highlighting the end of bullish momentum. However, the oscillator remained flat after signaling that bears are not fully in charge.
EUR/GBP Daily PRice CHART (Jan 1, 2018 – Jan 27, 2020) Zoomed Out
EUR/GBP Daily PRice CHART (04 Oct – Jan 27, 2019) Zoomed IN
Looking at the daily chart, we notice on Dec 17 EUR/GBP rallied to a higher trading zone 0.8400 – 0.8649. Since then, the market has stuck in a sideways move in the zone as created on Jan 6 a lower high at 0.8545.
Yesterday, the price rebounded nearby the low end of the trading zone. Thus, the pair may rally towards the high end of the zone contingent on clearing the weekly resistance levels underscored on the chart (zoomed in).
A close below the low end of the zone could encourage EURGBP bears to press towards 0.8276. Further close below this level could mean more bearishness towards 0.8067. Nevertheless, the weekly support levels marked on the chart should be considered.
EUR/GBP Four Hour PRice CHART (DEC 11- Jan 27, 2020)
From the four- hour chart, we noticed that in mid-Jan EUR/GBP broke below the uptrend line originated from the Dec 16 low at 0.8302. On Jan 22 EUR/GBP broke below the neckline of double top pattern residing at 0.8450 eyeing a test of 0.8315.
A break below 0.8349 could send EURGBP towards 0.8298. Although, the weekly support level underlined on the chart should be kept in focus. On the flip-side, any rally above 0.8596 could push the price towards 0.8575. That said, the daily resistance level underscored on the chart would be worth monitoring.
See the chart to know more about key technical levels the price would encounter in a further bullish scenario.
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.