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EURGBP Dragged Below Key Support Ahead of ECB

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The EURGBP looks poised for a move lower following the recent breakdown on the 4-hour chart. We looked at this ascending channel on Monday when the pair was testing key support at 0.8896.

Yesterday’s bounce from this area appears to have been a final gasp from bulls. The latest 4-hour close puts the price below former channel support at 0.8905 and buyers are currently testing the level as new resistance.

As long as sellers can defend former channel support as new resistance on a 4-hour closing basis, a move lower seems likely. Of course, those looking for additional evidence that bears are in control can wait to see how today’s session ends.

The one significant caveat here is the upcoming ECB rate decision on Thursday at 7:45 am EST. It’s followed closely by a Mario Draghi presser at 8:30 am EST.

This one-two punch is notorious for shaking things up. As such, it’s usually a good idea to stay on the sideline and let the dust settle before considering an entry.

But it may not be such a bad idea to wait even from a purely technical standpoint. You may recall the trend line from the November 2015 low. I mentioned it on Monday and in the October 5 commentary.

That level is less than 100 pips from the current price. And although I think an eventual breakdown is likely, I do anticipate an influx of buying pressure around 0.8830/50 if tested over the coming sessions.

Given that this trend line has been in place for two years, a daily close below it would be significant. Much more so than today’s intraday break of 4-hour channel support. It would pave the way for a move toward 0.8744 and perhaps 0.8600.

As always, the choice is yours. I’m going to stand aside for now as I don’t want to get caught in the volatile aftermath of Thursday’s ECB rate decision and press conference.

I’m okay with potentially missing out on an entry at current levels as I’m more interested to see what happens at the 2015 trend line near 0.8830/50.

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EURGBP break of 4-hour channel support

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4 comments
Bongani says

Good work and it always good to stay aside when there are such need, thank you Justin

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Asghar Ali says

There is great info about EUR please provide some information regarding fundamental also. I am great follower of your

Reply
    Justin Bennett says

    I don’t use fundamentals.

    Reply
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