EUR/USD and EUR/GBP Consolidate after Breakouts

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EUR/USD and EUR/GBP Consolidate after Breakouts

The euro is starting to look bearish again this week. Lets take a look at the bearish breakouts in EUR/USD and EUR/GBP.

EUR/USD 4H Chart 4/1
eurusd 1h chart 4/1
(click to enlarge)

In the EUR/USD 4H Chart, we can see that price has broken below a rising trendline from the low in mid-March, which was also the low on the year around 1.0460.

If not for the fact that the prevailing trend has been bearish, the breakout is not completely convincing yet. Price is still holding above the 100-period SMA, and the 4H RSI has not tagged 30, which means there is no bearish momentum yet in this time-frame.

EUR/USD 1H Chart 4/1
eurusd 1h chart 4/1
(click to enlarge)

As we can see in the 1H chart, there is a consolidation between 1.0713 and 1.0792. A break below 1.0710 would suggest further bearish outlook that can confirm the bearish breakout seen in the 4H chart. In the 1H chart, we see that the bearish bias and momentum is in full force as price holds under the moving averages and the 1H RSI is holding below 60 after tagging 30.

A break above 1.08 however keeps the EUR/USD in consolidation ahead of Fridays NFP, but only a break above 1.0875 would open up a bullish outlook.

EUR/GBP 4H Chart 4/1
eurgbp 4h chart 4/1
(click to enlarge)

The EUR/GBP also broke below a rising trendline from its low on the year (0.7014). Much like EUR/USD, EUR/GBP is still above the 100-period SMA and the 4H RSI has not tagged 30.

EUR/GBP 1H Chart 4/1
eurgbp 1h chart 4/1
(click to enlarge)

In the 1H chart, we can see EUR/GBP in an intra-session pullback. Now, price is still holding under the moving averages and the rSI is still holding under 60, so the bearish bias and momentum is still in play in the near-term. A break above 0.73 might keep EUR/GBP back in consolidation/bullish correction. Otherwise, the pressure remains to the downside towards the 0.7014 low.

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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.