In today’s analysis, we’re circling back to the EUR/GBP pair. The past few weeks this pair has been flirting with a significant, long-term horizontal support on the 0.83 level.
This support (orange) has been crucial since 2016. For years it was protecting the buyers from a bearish trend. At the beginning of March, for the first time since 2016, the price dropped below that support.
In theory, that gave us a proper, long-term sell signal. But the price reversed quite quickly, and instead of a bearish trend, we received the false bearish breakout (blue). Usually, false breakouts are excellent signals to trade in the opposite direction. Will that be the case here as well? We’re about to find out.
I mention this now because we’re back on 0.83 again. This time, we’re testing it from the top as support. The price creating a firm bounce would be an excellent buy signal. On the other hand, the price breaking the orange line and closing a day below the 0.83 would be a signal to sell. As for now, the first option seems slightly more probable.
