- The EUR/GBP price is rising within its range after bouncing off the support at the bottom of the range.
- The trend is sideways and is likely to extend, with the price oscillating within the range.
- EUR/GBP has just pulled back against the resistance of a group of moving averages in the 0.8565 area.
EUR/GBP price is rising within a multi-month range after bouncing off support at lows.
The pair is in a sideways trend and given the old traders' adage that “the trend is your friend”, it is likely to continue developing within the range.
EUR/GBP 4-hour chart
EUR/GBP has just pulled back after hitting the resistance of the moving average group at 0.8560. It would have to break decisively above the MAs at 0.8565 to confirm further upside, towards a target at the top of the range around 0.8595.
The Moving Average Convergence Divergence (MACD) indicator recently crossed above its signal line, giving a buy signal. This confirmed the rotation from the range lows up within the range. The signal was reinforced by the fact that the pair was in a sideways trend and the MACD has proven to be a more reliable indicator in non-trending markets.
EUR/GBP is expected to remain range-bound until a strong directional move breaks the trend.
A decisive break below the range low would pave the way for further decline to the next target at 0.8486. This is the Fibonacci ratio 0.681% of the range height extrapolated downward from the channel base. This is the method used by technical analysts to estimate range breaks. Further weakness could even lead the price to reach the next target at 0.8460, the full height of the downside extrapolated range (1.000).
Similarly, a decisive break above the range high at 0.8595 would signal a breakout with an initial target at 0.8635 followed by highs at 0.8645.
A decisive breakout would be characterized by a long candlestick breaking completely above or below the range floor and closing near its high or low, or three consecutive red candles clearly breaking through the level.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
