Forex Technical Update
The 4H EUR/GBP charts looks like it's forming a flag pattern. The 0.84-0.8420 area has been important resistance although it was broken on Feb.22. It is again struggling to break this resistance pivot area as it forms a flag pattern against the decline from the 0.85 handle. A break back below 0.8350 would clearly be seen as a flag breakout. Such a move should signal bearish continuation in the short-term toward the 0.8250-0.8270 consolidation support zone. A break above 0.84 would be an early clue of an attack toward 0.85 again.
In the 1H chart we see the RSI tag 70 then fall back between 40 and 60 and has been stuck there. A break of the flag pattern to the downside should be accompanied by the RSI breaking back below 40, and tagging 30, which kills the bullish momentum and establishes bearish momentum. Then if we get a pullback that fails to push the RSI above 60 (preferably staying under 50), the market should confirm the bearish outlook at least toward the 0.8250-0.8270 area.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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