After some turbulences during the Brexit negotiations, the GBP is gaining back its strength. Last week, the Pound was influenced by various rumours and informations from the negotiation process. Some of them were positive, some of the negative but we can see that traders finally decided that sentiment should remain positive.
That being said, let us analyse the EURGBP, which since the end of August is declining sharply but during the first half of the October, was undergoing a bullish correction. Yes, in our opinion this is just a correction so in the next few days the price should go lower. Our view is supported by the wedge formation (trend continuation pattern, orange lines) and the fact that the wedge retraced exactly 50% of the recent downswing. After bouncing from this resistance, the price broke the lower line of the wedge and two remaining Fibonacci lines (38,2% and 23,6%). Sellers also managed to break the horizontal support on the 0.89 (light blue), which was with us since the 18th of July. All that together is negative and the odds for a downswing are much higher.
The potential target for this drop is the long-term up trendline (black), so 50 pips more. In case of the breakout, the next one are the lows from the September around the 0.875 (red area). Bearish sentiment will be denied once the price will come back above the 50% Fibonacci but chances for that are now limited.
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EURGBP aims for the up trendline
Published 10/16/2017, 07:11 AM
EURGBP aims for the up trendline
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