EURGBP has been falling for the past few months but a reversal forex signal pattern has just formed on its daily chart. This indicates that an uptrend may start as soon as price breaks past the .8000-.8050 resistance levels.
If the .8000 mark holds as resistance though, price could make another bottom around the .7800 handle. Stochastic is already in the overbought area anyway, indicating that buying pressure is weakening.
Forex Signal Outlook
On the other hand, a push past the .8050 area could mean as much as 250 pips in gains for EURGBP as the reversal forex signal chart pattern is roughly of the same height. Further gains could take it to the next resistance zone at .8350.
Recall that the BOE just dumped its bias to tighten early next year, citing weak inflationary pressures and a potential drag from the euro zone. Meanwhile, data from the euro zone hasn’t been so bad recently, as the region was able to escape an economic contraction so far.
Event risks for this forex signal today include the release of UK CPI data, which might add support to the central bank’s dovish bias. German and euro zone ZEW economic sentiment figures are also due today and might add to volatility. If the euro zone figures come in strong while the UK data comes in weak, EURGBP could confirm the forex signal and start a reversal already.
On the other hand, bleak data from both economies might keep the pair in range and moving between the .7750 support zone and .8000 resistance. A triple bottom formation could be seen, which is still a valid forex signal for a potential reversal. In terms of monetary policy biases, the ECB is in a much more dovish state compared to the BOE but selling pressure for the shared currency seems to be exhausted already.
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