Forex Technical Update
The EUR/GBP continues a corrective rally after finding support above 0.7950. The 1H chart shows the market establishing bullish momentum and trading in a rising channel. Entering the 5/21-5/25 trading week, the EUR/GBP rally has stalled below 0.81, which was the level the market started the 5/7 trading week before falling.
Looking at the 1H chart, we are still trading in the rising channel. Even if it breaks, the 0.8050 level could be near-term support. If the market is to remain in a corrective rally, the decline should stay above 0.80, 61.8% retracement of the 0.7949-0.8088 swing. Preferably we stay above the 50% retracement mark at 0.8018 and stay above the 200-hour SMA if the market is to show clear corrective intent.
Looking at the daily chart, we see that we have completed a 3 session correction rally testing the 21-day SMA. However, if the correction extends beyond 0.81, I think there is a chance to pullback to 0.82-0.8220 area. Here we would face a previous support pivot and a declining trendline. But if the market breaks back below 0.80, we are likely in a bearish continuation with room down to 0.79, and 0.77 (2008 low).
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 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.