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On November 20 we discussed a 270 pip range on the EURGBP that could dictate the future direction of the Euro cross. At the time the pair was trading in the middle of the range at 0.8865.
One thing I mentioned at the end of that post is that a break lower was likely, at least that was my best guess. The justification I gave was that the recent decline since late August looked impulsive.
Despite rallying for a brief period in late November, sellers took over just below 0.9015 resistance. In fact, the November 28 session formed a quasi bearish engulfing pattern.
With the pair moving to test range support at 0.8745, I’m actively watching for a daily close (5 pm EST) below the level. Such a break would expose the 0.8600 handle followed by 0.8470.
Alternatively, bullish price action from 0.8745 could signal another turn higher. But be careful buying at this support level. The range has been in place for several months already, so it may not hold much longer.
If EURGBP bulls regain control and eventually secure a daily close above 0.9015, it would negate the bearish scenario. It would also pave the way for a move toward 0.9133 followed by 0.9280.
The EURGBP presents an opportunity to avoid USD volatility to some degree. So if you’re apprehensive about trading the EURUSD or GBPUSD, the EURGBP may be the better option. Just be sure you have a confirmed setup before risking any capital.
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