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EUR/GBP - Slipping Through Short-Term Support, Multi-Week Low Nears

 EUR/GBP is competing against a cluster of resistance levels and appears likely to maneuver lower if these stand pat . The pair are trading either side of the trend resistance and trend support apex, and an in depth below this support, and preferably the 38.2% Fibonacci retracement level at 0.9035, may inaugurate a period of lower prices.

The 20-day simple moving average has broken below the 50-day sma, a bearish sentiment set-up, and both of those two moving averages – 20-dma at 0.9072 and 50-dma at 0.9087 – also will act as short-term resistance. The longer-dated 200-dma is currently close at 0.8951 and an opportunity and shut below here also will increase the bearish market outlook. Below here, the five hundred Fib retracement at 0.8891 and therefore the September 3 multi-week low at 0.8865 will likely be targeted.

Any bullish reaction is predicted to run into resistance between 0.9148 and 0.9165.

From a fundamental outlook, news from the EU/UK trade talks will likely drive the pair. EUR/GBP may be a good barometer on how talks are progressing and any suggestion that a deal is on the cards will send the pair lower. On the flip side, if EU/UK trade talks break down, then the pair will quickly press against the resistance levels mentioned above.IG Retail trader data show 54.44% of traders are net-long with the ratio of traders long to short at 1.19 to 1. We typically take a contrarian view to crowd sentiment, and therefore the fact traders are net-long suggests EUR/GBP prices may still fall. And traders are further net-long than yesterday and last week, and therefore the combination of current sentiment and up to date changes gives us a stronger EUR/GBP-bearish contrarian trading bias.