The Tide Could Be Turning On EUR/GBP
We highlighted in January that a defiant cable could be carving out its low for the year, and price action on EUR/GBP now also points towards Sterling strength.
You need to stand back to really appreciate the bigger picture, and that certainly seems to be the case with EUR/GBP. Starting with the monthly chart we note the tide has slowly turned since topping out in August 2017. Having tracked mostly sideways since the 0.9307 high, bearish momentum made a solid comeback in January and saw a bearish outside candle cement a likely swing high below 0.9100. This means the 0.8617 low is a core focal point for bears as a clear break beneath it signals a long-term, trend reversal.
Switching to the daily chart, the structure has been firmly bearish since the 0.9092 high. A retracement stalled below the 50% Fibonacci level and bearish momentum is trying to drag the cross down towards key support around 0.8620. Prices are currently consolidating near the cycle low, although another day or two of compression could help time a better entry. A break of 0.8672 opens up a run towards the 0.8620 lows, and a break beneath here confirms a longer-term trend reversal. And, with little in the way of support until 0.8382, it could be one heck of a breakout.