EUR/GBP – Price Bottom Turning into a Flag Pattern

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EUR/GBP - Price Bottom Turning into a Flag Pattern

The EUR/GBP has found support at 0.7405 after the ECB announced that it was going to start purchasing government bonds in March through at least Sept. 2016.

Last week, EUR/GBP put in a price bottom after rallying back above 0.75. It started this week extending higher, and forming what appears to be a flag pattern.

There is immediate resistance just above, near 0.76. This is a previous consolidation low and where the 100-period SMA resides. Note that price is also testing the flag pattern resistance.

Above 0.76, 0.77 is key resistance area. There is a falling trendline, and a previous consolidation resistance area. Just below 0.77 there would also be a falling trendline coming down from the Jan. 2015 high at 0.7874.

To the downside 0.75 is a key support/resistance level and where the 50-period SMA resides. A break below would also clear the rising flag pattern and thus signal a bearish continuation to at least test the 074-0.7405 low with risk of breaking lower.

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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.