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EURGBP Quietly Sneaks Past Two-Year Support, Targets 0.8744

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Over the weekend we discussed the long-standing trend line support on the EURGBP. The level has been propping up the rally that began in November of 2015.

All of that changed just hours ago. The Euro cross closed Monday’s session at 0.8821, about 10 pips below former trend line support at 0.8830/40. That means any retest of support turned resistance will likely attract an influx of selling pressure.

Those who have followed along shouldn’t be surprised by this breakdown. Ever since the EURGBP topped out on August 29 I have held the view that the pair was in the process of carving a significant top.

Even last month’s selloff appeared to be impulsive, suggesting that supply was beginning to outweigh demand by a hefty margin. But without yesterday’s close below trend line support, there wasn’t much evidence that any bearish movement would have a lasting effect.

From here I’ll be on the lookout for a favorable selling opportunity on a retest of the 0.8840/60 area as new resistance. As long as this region holds on a daily closing basis (5 pm EST), I will maintain a bearish outlook for the EURGBP.

The first key support comes in at the September low of 0.8744. A daily close below that would expose 0.8600 followed by 0.8400.

Keep in mind that the trend line that just failed extends back nearly two years. As such, I would anticipate that the next bear move from the EURGBP to last several weeks if not months. That is, as long as sellers can maintain sub 0.8840/60 prices.

Note that this Thursday, November 2 is the Bank of England rate decision. The event kicks off at 8 am EST and will no doubt shake things up for the pound.

While not as significant for a cross currency, non-farm payroll is also this Friday, November 3 at its usual time of 8:30 am EST.

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EURGBP daily chart showing long-standing trend line

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19 comments
Anetor E.K says

Thanks Justin.

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Michele says

Grande Justin

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Tims says

Thanks Justin.

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Kayode says

Thanks Justin

Reply
    Justin Bennett says

    You’re welcome, Kayode.

    Reply
Farai says

Thank you for the update

Reply
    Justin Bennett says

    Anytime, Farai.

    Reply
Roy says

I’m in this trade

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Darius says

you mean on retest – after todays confirmation candle closes or durint today when you catch a retest – you sell?

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    Roy says

    No I was in from earlier during the last resistance level. I will add to this position possibly after a pullback. Patience is key always.

    Reply
TJ says

Hi Justin,

This is a nice trade for you, does your short trade still open on this one?

You haven’t write about USDCAD lately, may I ask your thoughts?
I saw that you are bearish on the U.S. dollar but it seems that CAD is even more dovish. What do you think?
Thank you !

Reply
    Justin Bennett says

    I’m not bearish the USD. Just the opposite, in fact. I’ll write about the USDCAD if I see something worthwhile. Cheers.

    Reply
      TJ says

      Thank you Justin, sorry about my bad interpretation of your view of USD, english is not my native language. I missed something when reading your article on USDJPY. Lesson learned for me I will pay more attention when reading.
      Thanks again for clarification, it’s really appreciated.

      Reply
Demetrio says

Gracias Justin.

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Raju says

Thanks Justin

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Joe Helmi says

Hi Justin,
I’m just wondering if this pair has turned bullish.
Your comment is highly appreciated.

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Mark says

What I hate about market is that sometimes it has a very strange behavior…Yesterday BoE raises interest rate to 0.5% but GBP crash instead to raise…Justin can you give some explanation about this? Very annoynig…

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