Bulls look to take control amid the breakout of a downtrend line

  • EUR / GBP gains strong traction on Tuesday and breaks a week-long range.
  • The setup supports the prospects for further gains towards the intermediate resistance at 0.8665.
  • The emergence of some buying should help limit the decline near the round 0.8600 level.

The EUR / GBP cross has continued to move higher during the first half of the European session on Tuesday and has soared to a week and a half high around the 0.8640 region.

Strong positive momentum on Tuesday has helped the cross confirm a bullish breakout through a week-long range. Subsequent force beyond the 0.8615 confluence hurdle suggests that the EUR / GBP cross has formed a solid foundation near the 0.8550-40 region.

The mentioned barrier is made up of the 100-period SMA on the 4-hour chart and a short-term descending trend line, extending from the highs on January 22. This, in turn, could have set the stage for an extension of the current recovery movement from multi-month lows.

The constructive structure is reinforced by the fact that the technical indicators on the 4-hour chart have been gaining positive ground. That said, the oscillators on the daily chart, although they have recovered from bearish territory, have yet to confirm the upside outlook.

However, the EUR / GBP cross now appears poised to take advantage of intraday gains and climb towards intermediate resistance near the 0.8665 region. Some subsequent buying should help the bulls aim to regain the round 0.8700 level.

On the other hand, any pullback towards the confluence resistance breakout point could now be seen as a buying opportunity. This, in turn, should help limit the decline near the recent trading range support around the 0.8600 level.

EUR / GBP 4-hour chart

EURGBP

EUR / GBP technical levels

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