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Can EUR/GBP Hold This Week's Price Bottom

Even ahead of the ECB event risk, the EUR/GBP was putting in a price bottom, specifically a double bottom. The 1H chart shows price complete the structure, then pop up above 0.78. Price has moved above the 200-, 100-, and 50-hour SMAs, and the 1H RSI has pushed above 70, showing nascent bullish bias and momentum.

(EUR/GBP 1H Chart 10/2)

Will this price bottom stick this week? If price pulls back, which it may because it is becoming overbought in the short-term now, we should monitor the 0.78 area. A bullish market should hold above 0.78. A break below 0.7790 could be a sign that the bulls gave up. Remember, the 0.7766 low is a fresh low on the year, and the prevailing trend was bearish. So if price falls below 0.7790, it should be pressured toward the 0.7766 low with potential of falling further.

To the upside, we should first monitor the 0.79, the 0.7940 area for resistance. 0.79 was a previous support pivot, while 0.7940 is around another support pivot and the 50-day SMA.

(EUR/GBP Daily Chart 10/2)

The ECB did not discuss QE, but focused on more aggressive ABS purchases. This could be interpreted as less dovish then what some might expect, but it still reflects a bank under pressure to continue stimulus measures.