EUR/GBP At Top Of Range; Rotation Possible
Forex4you | Jun 05, 2015 09:34AM ET
Looking at the chart on a higher time-frame, we see that the EUR/GBP pair is currently consolidating along a major multi-year lower channel line, which will probably provide support for a recovery rally.
The 200-month MA is also situated not far above price's current level at 0.7379, where it provides resistance and has already successfully repulsed price on three occasions, and so would be expected to lead a strong move if broken.
0.7379 is a key level to watch, in fact, because it has stopped price so many times before, and if we get a move clearly above it – that is including a margin of 20 points – so above 0.7400, it could confirm a breakout higher, with an initial target at the 0.7482 of the previous highs.
Zooming in, we see the pair is in a steady peak-and-trough progression higher on the 4-hour chart, which reveals a mini-uptrend within the broader sideways consolidation. It has just pulled back in a rough a-b-c correction within that uptrend, and has found support from its trend-line.
Given today's strong down-move following the positive Non-Farm Payrolls result, this has also increased the possibility of a rotation and the start of a move back down within the consolidation. Such a move lower would gain confirmation from a break below the 0.7251 lows, with an initial target at 0.7221.
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