EUR/GBP – We are in for a bumpy ride

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The EUR/GBP weekly chart highlights lots of sideways movement. We have been stuck in a range between .9306 and .8637 since May 2017 and this week we are testing lows as UK/EU negotiations reach crunch time.

It seems that traders have been paying attention to the Italian deficit problems and the continued issues with growth in the EU. As such, EUR/GBP has fallen around 400 pips since late August.

Technical points:

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  • Broken trendline which held pretty firm between Apr – Aug
  • Retest didn’t quite hit the trendline but we posted two consecutive lower highs
  • The issue is that we have just hit a support zone which looks to be stubborn
  • Very volatile week ahead as Brexit talks step up
  • Longer term we could see a move back to .8300 which is also a key support level
  • Remember of course EUR/GBP could move higher here off the support level if the Brexit draft is not passed

Obviously, there are a few factors in the way of EUR/GBP moving lower mainly the Brexit negotiations. Either way, the technical picture is showing we are testing lower and a break of the .8620 support level could indicate a move to the .8300 support zone. A good place for stops could be the .8770 mean value area of the consolidation which would lead to a decent risk to reward (not trading advice).

 

The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Rajan lectures for the Society of Technical Analysts at the London School of Economics and is a senior market analyst at FX Daily. He has previously worked as a fund manager and now provides commentary for some of the biggest websites in the world. Rajan analyses the main macro markets using tools like market profile, wave analysis and Fibonacci.

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