EURGBP Rally Could Falter with a Close Below 0.7840

EURGBP has gained nearly 1,000 pips since November of last year, the longest sustained rally since the 2012 low. It hasn’t been pretty at times, and just when the pair seemed ready to give in, it somehow managed to churn higher.

However, despite the “tricky” price action of late, the pair has one thing going for it that sets it apart from the herd – distinct levels from which to trade. Except for the GBPNZD wedge, which I commented on over the weekend, EURGBP has some of the best levels of any pair at the moment.

The 0.7842 level has acted as support and resistance on several occasions since February. Below that, the 0.7706 handle has played a vital role in supporting prices since the pair broke above it on February 8th.

Although the trend line break on March 2nd didn’t attract sellers in the way I thought it would; I still believe it was a strong indication that the four-month rally is tiring.

During yesterday’s session, the pair broke through trend line support that extends from the March 10th low. While the level was too ambiguous for us to trade it directly, it does further the idea that the strength of the current rally is beginning to fade.

From here traders can watch for a close below 0.7842, a move that would re-expose the distinguished 0.7706 support level.