EURGBP has been in rally mode since mid-2015.
After reaching a multi-year low at 0.6930, the euro cross quickly bounced back, putting in a multi-year high in October 2016.
However, you wouldn’t know the EURGBP is in an uptrend looking at the price action since July of 2016.
For the last two and a half years, the euro cross has been range bound between 0.8300 support and 0.9300 resistance.
But we have a new structure in play since the November 2018 low.
It seems EURGBP has carved a wedge pattern that is best viewed on the weekly time frame.
You can see how the pair has struggled for the last few weeks around 0.9030. There was even a bearish pin bar three weeks ago.
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Since that time though, buyers have been relatively stubborn.
It’s an indication that, in my opinion, the EURGBP is getting close to breaking free from this two-year pattern.
Given the uptrend that began in July 2015, a break higher seems to be the most likely outcome.
There are a few possible targets if we do see a weekly close above wedge resistance.
The first is 0.9300. As I mentioned above, it’s the range ceiling that has been in place since August 2017.
The 0.9300 handle is followed by 0.9500 and then 0.9800. Both levels were key factors in 2008 and early 2009.
As you may know, there is also a measured objective here.
When trading a wedge like this, you can use the height of the pattern to identify a final target/objective.
That’s easy to measure since we know the bottom is 0.8300 and the top is 0.9300 which gives us a height of 1,000 pips.
If we then measure 1,000 pips above wedge resistance, we get parity or 1.0000.
I can assure you that there will be plenty of sellers around parity if EURGBP reaches it over the coming months.
Of course, there are no guarantees.
The pair may also break lower which would expose range support at 0.8300.
But all in all, this appears to be a bullish formation. And the fact that parity is the 1,000 pip objective could be a significant clue.
It’s a waiting game for now though. Buyers first need to secure a weekly close above wedge resistance near 0.9030 to confirm the breakout.
Until then, EURGBP is vulnerable but only as far as the 0.8730 support area.
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