The EURGBP has enjoyed a 360 pip rally over the past 11 trading days. During that time the Euro cross has only suffered one down day apart from today, which is quite impressive on its own.
On Friday, buyers made another statement with a close above the 0.8720 handle. This level is the August 2016 swing high and was also the closing price that led to the January 16th gap up.
Additionally, there is an intraday ascending channel (second chart) that began forming when the pair rocketed higher in late February. While channel support hasn’t come under fire much since its inception, resistance has had its way with buyers throughout the rally.
There’s also another much larger pattern that I first mentioned on February 13th. While it’s nowhere near confirmed, the potential eight-month head and shoulders pattern is alive and well despite recent gains.
With the neckline nearly 400 pips away, we won’t know for quite some time whether this is a valid concern. It does look rather ominous at the moment, but in the Forex market, things can change in the blink of an eye.
The immediate concern for the bulls rests with the 0.8720 area. If they fail to hold this region on a daily closing basis, we could see the EURGBP slide toward the next support at 0.8640 followed by 0.8590.
As always, I’ll remain on the sideline until a favorable opportunity presents itself.
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