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EUR/GBP Outlook Hints at Bullish Breakout. What's the Catch?

EUR/GBP Outlook Hints at Bullish Breakout. What's the Catch?

Dimitri Zabelin, Analyst

EUR/GBP Forecast, Euro, British Pound Analysis – TALKING POINTS

  • EUR/GBP outlook suggests the pair could experience a bullish breakout
  • Signs showing pair is bottoming out after aggressive selloff since August
  • EUR/GBP still has to shatter what has shown to be formidable resistance

EUR/GBP TECHNICAL OUTLOOK

EUR/GBP has risen a little over one percent since it bounced back from the late-January support at 0.8389 (gold-dotted line) and is now testing resistance at 0.8533 (white-dotted line). Clearing this ceiling opens the door for a third retest of a formidable, multi-tiered resistance zone defined by the 0.8597-0.8642 price parameters (labelled as “key resistance range”).

EUR/GBP – Daily Chart

Chart showing EUR/GBP

EUR/GBP chart created using TradingView

As noted on the chart, the pair attempted to shatter this barrier twice in December 2019 and mid-January of this year. However, both times EUR/GBP capitulated and faced a bout of selling pressure until it bottomed out. Looking ahead, a third defeat could catalyze a comparatively more aggressive decline if it reinforces the notion that traders are not yet confident in the pair’s ability to climb beyond this point.

EUR/GBP – Monthly Chart

Chart showing EUR/GBP

EUR/GBP chart created using TradingView

Looking at a monthly chart shows a relatively more encouraging picture for EUR/GBP bulls. After declining almost eight percent since August 2019 and retreating to a three-year support zone, the pair could be showing signs of a recovery. However, surmounting resistance outlined in the prior paragraph may be critical in propelling EUR/GBP higher. This is also not considering Brexit volatility which could skew the trajectory.

EUR/GBP TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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

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