EUR/GBP Price Forecast: Break Above October 3 Would Consolidate Bullish View

  • EUR/GBP has retreated to key support after a strong recovery on Thursday.
  • The pair has likely reversed trend, but a break above the October 3 high would confirm a bullish reversal.

EUR/GBP retreats to the base of its multi-month range at 0.8380 after soaring on Thursday, October 3, as a result of comments from Bank of England (BoE) Governor Andrew Bailey.

The pair has likely reversed its previous bearish bias and is now starting a new short-term uptrend, however, a break above the October 3 high of 0.8434 would provide confirmation of such a reversal and a likely upside extension from so.

EUR/GBP Daily Chart

Assuming a bullish scenario, EUR/GBP will likely reach the key resistance level in the Moving Average group at 0.8450, as well as the high of the consolidation channel. The next target above that is the 200-day Simple Moving Average (SMA) in the green at 0.8510.

The Moving Average Convergence/Divergence (MACD) momentum indicator in blue has crossed above its red signal line, further signaling a likely reversal in the trend.

A break below 0.8311 and the October 1 lows would be required to reconfirm bearish bets and suggest that the medium-term downtrend was reaffirming. Such a move would be expected to drop to the next downside target at 0.8284 (78.6% Fibonacci extrapolation of August decline) followed by 0.8236 (100% extrapolation of the same decline).

Source: Fx Street

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