EUR to GBP Breaks Trend Line Resistance But Can It Clear 0.8500?
The 4-hour time frame reveals that the EUR to GBP exchange rate pushed beyond trend line resistance, but is there enough fuel to sustain the rally?
Trend Line Break: Bullish EUR to GBP
By connecting the highs of January 14, January 20, and January 30, we can see that EURGBP has broken the trend line. In fact, the currency pair even found support on it yesterday at 0.8433. This suggests that there are buyers in the market.
Reversal Candles Around SMAs: Bearish EUR to GBP
As of this writing, the EUR to GBP exchange rate is testing resistance at the 100 SMA at 0.8480. There is also the 200 SMA around the 0.8500 handle which may also limit any upward movement on the currency pair. This means that in order for EURGBP to rally, a convincing bullish close above 0.8500 needs to happen. If it does, it could make a run for the 0.8600 handle where it peaked on January 14. Tomorrow’s roster of economic data from euro zone or concerns about Brexit negotiations between the UK and EU could trigger this.
On the other hand, if the EUR to GBP exchange rate closes below yesterday’s low at 0.8432, we could see it fall further. There is near-term support around 0.8386 where the currency pair bottomed on January 24 and January 31. If support at this price does not hold, the next floor could be at 0.8330 where the currency pair fell on December 13.