Since catching a bid last Thursday on the back of dovish comments out of the BoE, EURGBP has struggled to keep its head above water. In fact yesterday’s session came within 25 pips of wiping out all of last week’s gains.
Looking back, EURGBP has conformed nicely to our analysis since mid October. The trend line that extends off of the August 5th low gave us a nice break that has so far contributed to a 300 pip decline.
Following the break, the first level in focus was the 0.7215 handle. The pair found little support here as the selling pressure proved too strong during the following session.
The subsequent retest of this area as new resistance between October 27th and 28th provided a second chance opportunity for those who missed the initial setup from former trend line support.
Fast forward to today and we can see that the pair is fast approaching (again) the next key support level at 0.7055. This offers yet another opportunity for traders to watch for a continuation of the move lower that began last month.
The bounce from 0.7055 last week confirmed that it is indeed a level of interest going forward.
My bearish bias will remain intact as long as the pair remains below former support at 0.7215 on a closing basis. A move below the 0.7055 handle would confirm that the bears remain in control and also signal that the 2015 low at 0.6935 is likely to come under fire in the days and weeks ahead.