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EUR/GBP Forecast: EUR vs GBP Price – Bulls Rejected at Resistance, What’s Next?

EUR/GBP Forecast: EUR vs GBP Price – Bulls Rejected at Resistance, What’s Next?

2020-05-22 14:15:00
Mahmoud Alkudsi, Analyst
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EUR/GBP Technical Analysis

  • Bullish move loses steam
  • Key chart points and signals to keep track of

EUR/GBP Price – Multi-Week High

On Friday, EUR/GBP surged to an over six-week high at 0.8940 then closed the weekly candlestick in the green with a 2.3% gain.

Alongside that, the Relative Strength Index (RSI) rose from 56 to 64 highlighting that bulls were in charge.

EUR/GBP DAILY PRICE CHART (Aug 1, 2018 – May 22, 2020) Zoomed Out

EURGBP daily price chart 22-05-20. zoomed out
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EUR/GBP DAILY PRICE CHART (March 17 – May 22, 2020) Zoomed In

EURGBP daily price chart 22-05-20 zoomed in

Looking at the daily chart, last week EUR/GBP broke above the neckline of the double bottom pattern located at 0.8863 and generated a bullish signal. Additionally, the price closed above the 50-day moving average highlighting the bullish outlook of the market.

Yesterday, the pair rallied to a near two-month high at 0.9000. However, the price reversed before testing the high end of the current trading zone 0.8912 -0.9015 reflecting a weaker bullish momentum.

A close below the low end of the aforementioned zone could send EURGBP towards 0.8832. A further close below that level may send the price even lower towards 0.8637. That said, the daily and weekly support levels underscored on the chart (zoomed in) should be considered.

On the other hand, any failure in closing below the low end of the zone means that the bullish momentum is still intact and EURGBP may rally towards the high end of the high end. A further close above that level could extend this rally towards 0.9149. In that scenario, the weekly resistance levels marked on the chart should be watched closely.

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EUR/GBP FOUR HOUR PRICE CHART (MAy 11 – May 22, 2020)

EURGBP four hour chart 22-05-20

Based on the analysis of the four- hour chart, yesterday EUR/GBP broke below the uptrend line originated from the May 14 low at $0.8826 eyeing a test of the May 18 low at 0.8894.

A break below 0.8891 would be considered a bearish signal and may send EURGBP towards 0.8841. Although, the daily support level underlined on the chart should be kept in focus. In turn, any break above 0.9033 could trigger a rally towards 0.9090. Nonetheless, the weekly resistance level printed on the chart should be monitored.

See the chart to figure out more about key technical levels the price would encounter in a further bearish scenario.

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Written By: Mahmoud Alkudsi, Market Analyst

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.

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