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EUR/GBP Pulling Back - Watch for Resistance

The EUR/GBP found support at 0.7405 against a bearish reaction that followed the ECB's announcement of QE in the previous week. Since then the pair formed a price bottom when breaking above 0.75. It is entering this week extending the rally and forming what looks like a flag pattern.

EUR/GBP 4H Chart 2/3


(click to enlarge)

The market appears to be tentative ahead of Thursday's BoE meeting, so we should respect key resistance around 0.76. This area contains the lows from a previous consolidation and the 50-period SMA. Price is also touching the flag pattern resistance just under 0.76. 

At this point a break below 0.75 would put EUR/GBP below some key factors including:
1) the 50-period SMA,
2) a support/resistance area from last week,
3) a rising speedline from last week's 0.7405 low. 

Therefore a break below 0.75 should expose the 0.74-0.7405 lows with risk of breaking lower. 

Above 0.76, the next key resistance will be around 0.77. This area involves
1) a previous resistance area
2) the 200-period SMA
3) Just below 0.77, there is a falling trendline coming down from the Jan. and 2015 high of 0.7874. 

A break above 0.7615 will be needed to introduce a bullish outlook for the short to medium-term. For now, the bullish attempt is contained in the short-term, within the context of a medium-term bearish outlook.