EUR/GBP Is Aiming For 08650 In The Short Term

EUR/GBP is developing within a slightly bearish trend channel which is especially clear on the W1 time frame.

I think the next target of the pair will be the support trend line of the channel, which is around 0.8650.
The scenarios that could follow after that are two:

In the first scenario there could be a breakout below the support trend line and a depreciation to 0.8350 – 0.8300 which is a strong support on the monthly time frame.

In the second scenario the pair will remain within the channel and there will be a rally to the resistance trend line.

The market will decide which scenario is valid, but at this stage both look equally probable.

EUR/GBP Next Week

Today is the end of the trading week and what we can observe on the W1 time frame creates a more realistic expectation about how the EUR/GBP pair (which I also assessed yesterday) will develop.

After reaching the support trend line (in black) this week this pair rebounded from the marked in pink support zone around 0.8730 – 0.8750 and I think it is very possible for it to close as a doji bar above that zone.

The last two W1 time frame bars also hint that that it is very likely for the pair to change directions next week by renewing its rally to the resistance trend line around 0.8950.

In the alternate scenario there will be a breakout below the two support zones (in pink and black), but in opinion that scenario appears less probable.

EUR/GBP Continues Developing Within A Consolidation

EUR/GBP is depreciating to the support trend line of the channel with height of 290 pips within the consolidation. At the same time the pair managed to break out below the support zone between 0.8730 and 0.8750 marked on the W1 time frame screenshot in light purple.

We should watch closely in which direction there will be a breakout of the trend channel.

In the first scenario there will be a breakout below the support trend line. Should that occur I think we can expect a depreciation to 0.8350 – 0.8300.

Should the pair rebound from the support trend line and start rallying to the resistance trend line of the channel we should watch for a test and a breakout above the local high at 0.93061 from 29^th August 2017.

EUR/GBP Is Developing A Barbed Wire Pattern On The W1 Time Frame

Usually when we see such a pattern the recommendation is not to touch the platform and not to trade before there is more clarity on the charts.

In this case, however, the situation appears quite clear. EUR/GBP has once broken out below the support zone around 0.8750 – 0.87330 but it has rebounded to test the resistance marked by the middle line of the Bollinger Bands indicator on the W1 time frame. Such development can be seen often across instruments and time frames. And this is where the barbed wire pattern has been developing for a fourth week. As we all know, the larger the time frame is, the longer and larger the movement afterward will be. 

In this case, in my opinion, the move will be to the downside to 0.8450-0.8430.

The alternative scenario is for a rally to 0.9000 and 0.9100, but for the moment I think the first scenario is more probable.

EUR/GBP Will Probably Continue Depreciating

EUR/GBP is moving in a downward trend, forming three bearish waves.

From 29th August 2017 (0.93061) to 27th September 2017 (0.87459) the pair has fallen with over 550 pips, after which it has successfully formed a pennant, which is especially obvious on the D1 time frame, and if the pair reaches its limit it should fall to 0.8350.

At the moment, however, EUR/GBP is in a support zone, also especially obvious on the daily time frame and I think that in order to break out below that zone it will need time and a correction to the upside.

Should it break out below this support zone the next support zone should be around 0.8600 – 0.8560.

EUR/GBP Almost Reached the Strong Resistance at the Diagonal Trendline and Started Falling

About three weeks ago I wrote about my expectations about this pair. The situation here has been developing very logically, the only difference being that I thought that the pair might rise with another 100 pips, but that didn’t happen. Rather than move a little higher, so it can touch the diagonal trendline, it started falling immediately and has been falling continuously for three weeks now.

As I am examining the monthly time frame I keep thinking that the almost 400 drop is just the beginning. On the other hand, on the smaller time frames (like the daily and the weekly ones) you can see that EUR/GBP has reached a serious support level at 0.7750 which is visualized by the green line of the (EMA)89 on the daily time frame and the middle line of the Bollinger Bands indicator on the weekly time frame. The support will inevitably slow the move to the downside and it is possible it will temporary bounce off of it.

If the pair manages to break below the support on the weekly time frame, it will probably continue falling towards the next support level at 0.7580 (the green line of EMA89). The next support below that one is 0.7450, which is the middle line of Bollinger Bands on the monthly time frame.

EUR/GBP Is Close to a Reversal

After five months of a powerful upwards trend the pair finally reached the resistance level at 0.8100, visualized on the screenshot with the upper band of the Bollinger Bands indicator on the monthly time frame. That band is usually a very strong resistance level, which makes me think that the pair is close to a reversal and beginning a correction to the downside.

That said, I do expected the upward move to continue for another 100 pips or so – which is what is left to the trend line on the monthly time frame (the red line).

In conclusion, I think that EUR/GBP reaching 0.8180 will be turning point after which we will see the pair start moving to the downside.

EUR/GBP Keeps Testing 0.79

EUR/GBP has been testing the powerful resistance at the 0.79 level, which coincides with the (EMA)89 (the green line) on the monthly time frame. The pair testing it even now.

I don’t know how many traders use (EMA)89, that is (Exponential Moving Average)89, in their technical analyses, but so far this indicator has never led me astray, especially when it comes to such a large time frame as the monthly one.

You can see for yourselves on the screenshots. On the weekly time frame the pair appears to be in the middle of nowhere, but on the monthly one the green line of (EMA)89 has been a barrier for the pair’s rise for a month now.

If it does manage to eventually break above 0.79 next level of resistance is 0.81.