EUR/GBP Price Forecast: Euro vs British Pound - A Breakout or Reversal?
EUR/GBP Technical Outlook
EUR/GBP – Weak Bears in Bearish Market
Last week, Euro weakened against British Pound and broke below 0.8300 handle for the first time in two and half months. On Friday, EURGBP closed the weekly candlestick in the red with 2.2% loss. This week, the market U- turned as some bears seemed ease up.
This week, the Relative Strength Index (RSI) rose from 34 to 44 highlighting weaker downtrend move.
EUR/GBP Daily PRice CHART (Jun 1, 2018 – Feb 21, 2019) Zoomed Out
EUR/GBP DAILY PRICE CHART (SEP 4 – FEB 21, 2019) ZOOMED IN
Looking at the daily chart, we notice that in Q4 of last year, bears took charge and pressed the EUR/GBP to a multi-year low. On Dec 13, the price rebounded from 0.8276 then rallied after. This led the market to pause the downside move and consolidate creating higher lows with lower highs.
On Tuesday, the pair rebounded again around the aforementioned level and developed a double bottom pattern. A rally above the neckline residing in 0.8596, could push EURGBP towards 0.8891. In that scenario, the weekly resistance levels and trading zones marked on the chart (zoomed in) should be considered.
Yesterday, the price remained in current trading zone 0.8278 – 0.8400 as failed to move to the higher one. Thus, the price could be on the way for a test of the low end of the zone. Further close below this level may embolden bears to press towards 0.8067. Further close below this level could mean more bearishness towards 0.7949. That said the weekly support levels underscored on the chart should be kept in focus.
In turn, a close above the high end of the zone reflects bears’ hesitation. This might lead some of them to exit the market causing a rally towards 0.8504. Nevertheless, the daily resistance levels printed on the chart should be monitored.
EUR/GBP FOUR HOUR PRICE CHART (JAn 28- FEB 21, 2020)
From the four- hour chart, we noticed that on Feb 10 EUR/GBP broke below the uptrend line originated from the Jan 31 low at 0.8387. Any violation of the uptrend line originated from the Feb 18 low at 0.8282 could be considered as a bearish signal.
Thus, a break below 0.8246 could send EURGBP towards 0.8102. Although, the weekly support level underlined on the chart would be worth monitoring. On the other hand, a break above 0.8420 may cause a rally towards 0.8504. Yet, the daily resistance level marked on the chart should be watched closely.
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