Forex Technical Update
EUR/GBP has held above the 2012-low of 0.8220, and established support near 0.8225. The 4H chart shows the market fail to continue the downtrend, and instead is forming sideways price action, which can be interpreted as a possible double bottom development. The latest 4H candle was very strong and threatens to test the 0.8275 resistance pivot, above which the EUR/GBP would have completed a double bottom.
A break above the double bottom opens up first the 38.2% retracement at 0.8290, but if a throwback from here fails to break back below 0.8250, we can still confirm the bullish breakout. Conventional pattern breakout projection targets the 0.8325 level, between the 50% and 61.8% retracements. Note that as we near 0.8330, we also have a 200 4H simple moving average and a declining trendline going back to a high near 0.85, seen more clearly in the daily chart.
A break above 0.8330/0.8340 therefore opens up the upside risk back toward the 0.85 resistance, all within the context of a sideways market. However, it should be noted that the moving averages in the daily chart is in a bearish orientation, so the current rally should indeed by limited in scope. The bearish outlook forms after a break below 0.8220, with targets/support pivots of 0.8140, and 0.8070.
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.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes and IBTrade will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.