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EUR/GBP Tests the Strength of its Kilroy Pattern

Kilroy: Last week, we saw the EUR/GBP in an inverted head and shoulder, aka. Kilroy pattern attempt. We ended up seeing price break above the neckline around 0.7980. However, price has stalled under 0.80 and retreated to start the week.

As EUR/GBP closes in on 0.7930-40 area, we see a cluster of key support factors as you can see on the 4H chart below"

(EUR/GBP 4H Chart 8/12)

Support Factors: There are the cluster of 200-, 100-, and 50-period SMAs, a rising trendline, and a support/resistance area. This bunch of support factors will be key if the market is to continue its bullish correction mode. 

Breakdown: A break below 0.7930 however would expose the 0.7875 low, and a break below that would expose the 2012-low at 0.7764.

Support Holds: If price can hold above 0.7940, the bullish outlook remains in the short-term as the inverted head and shoulders would be confirmed. The 4H RSI in this scenario would likely hold above 40, would adds evidence that the bullish momentum is maintained for the short-term. The first target/resistance in this scenario will be around 0.8033. A slightly more aggressive, 38.2% retracement of the 2014-decline, would be around 0.8075.

(EUR/GBP Daily chart)