EUR/GBP Price Outlook: Signals a Possible Reversal - Euro vs GBP Forecast
EUR/GBP Technical Analysis
EUR/GBP Price – Multi week Low
On Thursday, EUR/GBP printed its lowest level in four weeks at 0.8725 then rallied after. Yet, the weekly candlestick closed in the red for the third week in a row with 0.2% loss.
Alongside that, the Relative Strength Index (RSI) remained flat below 50, highlighting a paused downtrend momentum.
EUR/GBP DAILY PRICE CHART (Nov 1, 2018 – April 17, 2020) Zoomed Out
EUR/GBP DAILY PRICE CHART (Nov 1 – April 17, 2020) Zoomed In
Looking at the daily chart, we noticed that on April 7 EURGBP declined to current trading zone 0.8687 – 0.8832. A week after, the market closed below the 50-day average however, remained trading in the zone, reflecting bear’s hesitation at this stage.
Any close below the low end of the zone could resume bearish price action towards 0.8620. Further close below that level may encourage bears to press towards 0.8509. Nevertheless, the weekly support levels underlined on the chart (zoomed in) should be considered.
On the flip-side, another failure in closing above the low end of the zone could lead some bears to exit the market causing EURGBP to rally towards the high end of the zone. Further close above that level might extend this rally towards 0.8920. That said, the weekly resistance level and area marked on the chart should be monitored.
EUR/GBP FOUR HOUR PRICE CHART (April 2 – April 17, 2020)
From the four- hour chart, we noticed that currently EUR/GBP trades below the downtrend line originated from the April 10 high at 0.8786. Any violation to this line would be considered as a bullish signal.
Its noteworthy that, the price signals a possible reversal as developed a double bottom pattern. This means any break above the neckline located at 0.8744 may cause a rally towards 0.8810. Having said that, the daily resistance level underscored on the chart should be watched closely. In turn, a break in the other direction i.e. below 0.8665 could send EURGBP towards 0.8620. Although, the weekly support level printed on the chart should be kept in focus.
See the chart to figure out more about key technical levels the price would encounter in a further bullish/ bearish 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.