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EUR/GBP - Bullish Breakout Will be Challenged by Critical Trendline

EUR/GBP has been bullish in August after starting with a rebound from 0.6950. After reaching 0.7170 there was a bearish correction. However, we are seeing a bullish continuation swing this week. This price action is going against the bearish correction built up in the past 2 weeks, and puts the 0.7170 high in sight.

EUR/GBP 4H Chart 8/20
(click to enlarge)

From the 4H chart, we can see that although price action is bullish, the overall mode has been more or less neutral, sideways. The moving averages are mostly sideways and the RSI shows no momentum in either direction. Still, this week's rally can extend even beyond 0.7170. However, as price pushes to 0.72, we should monitor the reaction to a key falling trendline seen in the daily chart. 

EUR/GBP Daily Chart 8/20
(click to enlarge)

A break above 0.72 could be a sign that EUR/GBP has finally shifted into a sideways market in the medium-term. It has been mostly neutral-bearish since March, but since May, we have seen lower highs and lower lows despite the choppiness. Now, if price can push above 0.72 and the previous resistance pivot at 0.7223, this pattern would be broken. In this scenario, we still have to limit the bullish outlook to 0.74 and possibly 0.75. The bullish outlook in the short-term could be improved if price starts to bounce off of 0.71 as support. Otherwise, we should still hang on to some bearish bias in this pair in the medium-term.