The EURGBP has been trending lower since last August.
We traded the pair a few times during that period, including the topping pattern that began to materialize on August 19th.
We also caught the next leg lower on August 22nd.
However, the price action since November hasn’t offered us much.
Despite moving lower, the EURGBP has been choppy, especially the period between October 16th and December 3rd.
The pair only moved about 100 pips lower during that time.
But a market doesn’t stay indecisive forever.
The latest bounce in mid-December looks particularly interesting, especially when you consider that we may have the first higher low on our hands.
That December bounce, by the way, occurred at a critical support level at 0.8300 that dates back to July 2016.
Now, here are a few points to consider.
First of all, the EURGBP retesting the descending channel resistance below doesn’t necessarily signal an imminent move higher.
For all we know, this 0.8560 area could attract enough sellers to push the EURGBP lower once more.
Second, the first higher low in mid-December is only a factor if the pair can also carve the first higher high.
That requires a sustained move above 0.8590.
So until the EURGBP can close the day above this confluence of resistance between 0.8560 and 0.8590, the pair will remain under pressure.
But a close above 0.8560/90 could turn the euro higher against the pound.
And for full disclosure, a break higher is my base case scenario as long as EURGBP stays above support at 0.8460.
Key resistance levels to watch should we get a bullish breakout include 0.8680, 0.8800, and 0.8920.