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EURGBP Failure to Reach New Highs Leads to Key Reversal

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EURGBP was one of five pairs included in the most recent weekly commentary. In it, I noted how the Euro cross had broken below trend line support and was in the process of forming what appeared to be a head and shoulders reversal on the intraday charts.

While I’m hesitant to call the current formation a head and shoulders after the last 72 hours of trade, the pair is still being capped by former trend line support, which continues to act as resistance.

On top of that, the pair carved out a bearish engulfing pattern during yesterday’s session. This came after a failure to breach the February high at 0.7924. What makes yesterday’s price action interesting, however, is the close below the 0.7840 handle. As you can see from the chart below, this level has acted as a key pivot since the second week of February.

Looking lower, key support comes in just above 0.7700. A close below that would expose the support area that resides between 0.7490 and 0.7525.

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EURGBP bearish engulfing pattern on the daily chart

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