Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
The EURGBP has been trending higher since May.
That triple bottom at 0.8450 turned out to be a pivotal moment for the euro cross.
Not only did buyers extend the pair higher by more than 800 pips following that May low, but they also took out the previous 2019 highs at 0.9090.
You can see how EURGBP tested that 0.9090 handle as new support on the 31st of July.
Not surprisingly, buyers stepped in and eventually took prices to 0.9320 earlier this month.
However, the EURGBP uptrend faltered last week.
Although the trend is technically intact, last week’s 230 pip selloff and retest of 0.9090 support are not good signs for bulls.
The most significant outcome of last week’s move is visible on the weekly time frame.
Notice how last week’s range (high to low) engulfed the previous one.
It also broke a 14-week win streak.
That type of selling pressure after a multi-month 830-pip rally is significant, in my opinion.
But there’s something else occurring here that has piqued my interest.
The 4-hour time frame below is carving what could be a head and shoulders (bearish) reversal pattern.
It’s going to take a daily close below 0.9090 to confirm the reversal and open up downside targets.
One of those targets is 0.8915.
You can see how this area served as support in late July.
I also expect to see an influx of selling pressure between 0.9180 and 0.9200.
As long as 0.9200 holds, I think there’s a good chance we’ll see EURGBP weaken further. And if the pair breaks back above 0.9200, we could see a retest of that 0.9250 area.
Keep in mind, however, that the above does not mean the pair will reverse lower.
There are no guarantees in trading.
So while EURGBP does appear to be topping below 0.9320, it’s important to stay vigilant and wait for a signal before entering.
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