It’s no secret that the pound has dominated the euro so far in 2020.
The pair has struggled to maintain gains, and even the December 2019 bounce from a multi-year support level didn’t produce much for bulls.
But the EURGBP is starting to look interesting again.
You may recall my post from January 31st.
At first glance, it looks like I was dead wrong.
Despite a brief rally following that post, EURGBP buyers fell asleep on the job and allowed the pair to slip below 0.8385.
However, I do want to point out that the pair never closed above that 0.8590 resistance level.
You may recall that 0.8590 was the level buyers needed to take out to confirm the bullish reversal.
Furthermore, I wasn’t wrong, at least not yet.
The entire basis of that January 31st post was that a bottom is likely while EURGBP trades above the 2019 low at 0.8276.
Sellers came within six pips of that low on Tuesday, but so far, the pair is holding above it.
On top of that, the EURGBP has closed back inside of a descending channel I pointed out in the February 8th forecast video.
As I’ve said many times before, downside breaks of descending levels often turn out to be false breaks.
That appears to be the case so far.
As long as the EURGBP remains above new support near 0.8330/40 on a daily closing basis, I favor longs here.
We could also have the beginning of a double bottom.
Just keep in mind that buyers need to secure a close back above that 0.8385 resistance level to expose higher levels, including 0.8460.
I also think the more significant opportunity would materialize with a daily close above this channel top near that 0.8460 area.
So if you’re looking for something more conservative, that’s the level to watch.
But as long as EURGBP is holding above the 2019 low at 0.8276, the idea I wrote about on January 31st is alive and well.
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