- EUR/GBP is trading back inside a multi-month range after temporarily breaking out to the upside.
- It could now potentially continue falling to the range lows, with support from 50 and 100 MAs on the way.
- The pair is in a sideways trend that continues extending.
EUR/GBP has fallen back inside its multi-month range after temporarily breaking out to the upside on May 7.
The move back down inside the range continues the pair’s sideways trend. This trend is expected to continue given the old saying that “the trend is your friend”.
EUR/GBP Daily Chart
EUR/GBP has decisively broken back inside its medium-term range. There is a chance the pair could now fall back all the way down to support at around 0.8540.
Two major Moving Averages – the 50-day and 100-day Simple Moving Averages (SMA) are converging at 0.8566, however, and these are likely to act as a barrier to further downside. As such, EUR/GBP may pause if it falls to that level.
The Moving Average Convergence Divergence (MACD) indicator is threatening to cross below its red signal line. If such a cross is confirmed (on a daily close basis) it will add further bearish evidence suggesting EUR/GBP will continue descending within the range/channel.
For a change of the sideways trend, EUR/GBP would need to make a decisive break below the range lows or above the April 23 high.
In the case of a break below the range lows the first downside target would be located at 0.8486 – the 0.618 Fibonacci ratio of the height of the range extrapolated lower from the channel’s base. This is the common method used by technical analysts to estimate range breakouts. Further weakness could even see price reach the next target at 0.8460, the full height of the range extrapolated lower.
A decisive break would be one characterized by a long red candlestick that broke completely below the range floor and closed near its low, or three consecutive red candlesticks that broke clearly through the level.
The top of the range has already been breached several times suggesting it has weakened and provides a less reliable resistance level. For confirmation of a new uptrend now, EUR/GBP would need to not only break above the top of the range, but also above the April 23 peak at 0.8644. On the way up, 0.8620 (May 9 high) would supply resistance.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats to 1.0700 area following post-PCE jump
After spiking to a daily high of 1.0720 with the immediate reaction to US PCE inflation data, EUR/USD lost its traction and declined to the 1.0700 area. Investors remain cautious ahead of this weekend's French election and make it difficult for the Euro to gather strength.
GBP/USD stays below 1.2650 after US inflation data
GBP/USD struggles to preserve its bullish momentum and trades below 1.2650 in the American session on Friday. Earlier in the day, the data from the US showed that the annual core PCE inflation declined to 2.6% in May, limiting the USD's upside and helping the pair hold its ground.
Gold keeps its daily gains near $2,330 following US PCE data
Gold prices maintain their constructive bias around $2,330 after US inflation readings gauged by the PCE matched consensus in May and US yields advance slightly across the curve.
BTC struggles around the $62,000 level
Bitcoin price faces pullback resistance at the lower band of the descending wedge around $62,000. Ethereum price finds support at $3,288, the 61.8% Fibonacci retracement level. Ripple price faces resistance at $0.500, its daily resistance level.
French Elections Preview: Euro to suffer after the calm, as specter of extremists, uncertainty rise Premium
The first round of French parliamentary elections is set to trigger high uncertainty. Soothing messages from the far right and far left leave the Euro vulnerable to falls. Calm may return only after the second round of voting on July 7.