EURGBP – 4HR

EURGBP –

Pound Sterling hit hard during today’s London session as senior EU diplomats suggested significant barriers still exist around trade deal negotiations. The unfavorable news sent the cross rallying to a three and a half week high of 0.9084.

Coinciding with these three weeks is how well EURGBP has tracked the 200 MA (Blue line) as resistance. We see several attempts from buyers to breach above this level before today’s unfoldment provided the catalyst to complete the move above this line.

Despite pushing the pair into overbought territory on the RSI, this behavior seems to suggest increasing demand rather than a typical reversal pattern, with price action consistently ebbing above 70 compared to a steady incline.

Short-term upside targets would include the recent highs of 0.9107 and 0.9148, respectively. To establish potential downside targets, we need to take a look at the daily chart below.

I’ve included the Ichimoku cloud indicator as it provides a possible roadmap for the pair. We see price action is approaching the top of some cloud resistance that could potentially hinder any chances of more accelerated climbs in the longer-term.

While there is always a possibility that the price breaks above and continues trending upwards, the likelihood of this occurring before the end of December deadline is slim. We see the Ichimoku cloud resistance increasing in strength as the month passes. The downside targets to keep in-mind are 0.8865 (held multiple times as a support level), followed by the 0.82 regions last seen in February this year.

Finally, let’s not forget that the market has had plenty of time to digest these Brexit trade negotiations, so we probably won’t be in for any shocks or surprises, regardless of the outcome. While the pair appears bullish in the short-term, the charts hint at the Pound finding value medium to long-term.

Note: Click on charts to enlarge.

 

By Adam Taylor CTEe

.@adamt_trading

Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg

Disclaimer: The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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