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EUR/GBP - Technical Forecast: Price May Correct Higher as Bears Lose Steam

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Last week, bears took charge and pressed EUR/GBP to a multi-week low. However, bears look weaker this week. Will bears keep controlling the price action or will bulls come back?

Euro vs GBP Technical Overview

  • EUR/GBP price bears in charge
  • Bearish outlook while below 0.9014

 

EUR/GBP: Bears Pullback

Last week, Euro hit a four-week low against the British Pound at0.8944. However, the price rallied and closed a weekly candlestick modestly in the green with a 0.1 % gain, as some bears seemed to cover.

Alongside that, the Relative Strength Index (RSI) remained below 50 signaling that bearish momentum was still intact.

EUR/GBP Daily Price Chart ( October 14 -November 12, 2020 )

Chart Source: Webtrader, Capex.com

On October 27, EUR/GBP closed below the 50-day SMA and since then the price has failed on multiple occasions to overtake this indicator highlighting that bears were in charge. This week, the price failed twice to close below the low end of the current 0.8893 - 0.9014 and rallied eyeing a test of the high end of the zone.

 

A daily close above the high end of the zone at 0.9014 could end the bearish sentiment and may send the pair towards the weekly resistance at 0.9131.

While any failure in closing above the high end of the zone could reverse the current move towards the low end of the zone at 0.8893.

EUR/GBP Four Hour Price Chart ( October 26 -November 12, 2020 )

Chart Source: Webtrader, Capex.com

On November 4, EUR/GBP traded above the slopping bearish trendline originated from the October 26 high at 0.9104 and generated a bullish signal. However, the price declined after and started a downtrend move creating higher lows with lower lows.

To conclude, the bearish momentum seems weaker, and break above the downtrend line originating from the November 5 high at 0.9067, could correct the price higher. Therefore, a break above 0.9053 may cause a rally towards 0.9131, while a break below 0.8837 could send EUR/GBP towards 0.8777. As such, the support and resistance levels underlined on the chart should be kept in focus.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.