EUR/GBP – Bulls Threatening a Key Breakout

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EUR/GBP - Bulls Threatening a Key Breakout

EUR/GBP started this week with a slide that broke below a rising trendline and initiated a bearish continuation scenario. However, as we wind down the week, we are seeing bulls take back control and threaten a key resistance.

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The 4H chart shows that after the breakout, price held above 0.7225 and was able to rally back above this week’s highs around 0.7340. Price looks poised to retest the highs around 0.7384. It if does, it essentially sets up a range between 0.7384 and 0.7225. A break above 0.7384 would not only signal a bullish continuation in the short-term, but likely a bullish correction in the medium-term.

When we look at the daily chart, we can see that price would essentially break above a falling trendline and the daily RSI would push above 60. This shows loss of bearish price structure and momentum. Still, with the prevailing bearish trend still being the dominant mode, we should first limit the bullish outlook towards the 0.7450 pivot. If price starts to hold above 0.73, we can build more confidence for the bullish outlook towards the 0.7550-0.76 area.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.