Sun, Dec 04, 2022 @ 16:06 GMT
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EUR/GBP: Bulls Looking to Buy on Dips?

As my colleague Fawad Razaqzada noted earlier today, the British pound has finally caught a small bid today after selling off sharply through the first three days of the week (see “Brexit-hit GBP/USD rebounds ahead of UK GDP and US CPI” for more). There is certainly some prospect of a bounce in GBP/USD, which is testing a critical long-term Fibonacci retracement, but we also wanted to a key make-or-break level for the recent rally in EUR/GBP.

Looking at the daily chart, EUR/GBP broke out to a fresh year-to-date high yesterday, eventually surging up to hit its highest level since last October near 0.9030 in this morning’s trade. That said, rates have now reversed to show a possible bearish “dark cloud cover” pattern in development, which could point to a near-term pullback. Such a move wouldn’t be particularly surprising, with the unit hitting the top of its 2-month bullish channel as well.

Technically speaking, the near-term horizontal levels to watch will be the Q4 2017 highs around 0.9030 and March’s previous-resistance-turned-support at 0.8970. Given the near-term bullish momentum, trend followers should be inclined to look for buying opportunities on any near-term dips toward 0.8970 support or the bottom of the recent channel in the mid-0.8900s. Only a break below the month’s low around 0.8855 would through the near-term bullish bias into doubt.
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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