Earlier this month, EUR/GBP failed to sustain a break above the 0.8650 region, which has acted as strong resistance since June last year. This has helped to reaffirm the pair’s tight range between 0.8650 to 0.8295, giving or taking some extreme price movements on either side.
At the time of writing, EUR/GBP was trading at 0.8492, which is the center of what has become a narrower range for the pair over time. On higher time frames, such as the daily chart, it becomes evident that the price is hugging the bottom of a much wider range between 0.93090 and 0.82954.
The longer price stays at the bottom of this much larger range, the bigger the worry for EUR/GBP as the price shows a willingness to consolidate at much lower levels. Price below 0.82954 for a length of time could ultimately be cataclysmic for the pair, as it would mark a structural break lower. Such a move would leave little price support until the 0.81 region, and beyond that, 0.74. The rise in EUR/GBP between March and June failed to assuage those downside concerns.
Meanwhile, any move upwards in EUR/GBP faces a myriad of resistance, starting with the 0.8650 level. After that, trades face some heavy congestion up to the 0.91 level before getting anywhere near the top of EUR/GBP’s much wider range. In other words, a move higher in EUR/GBP beyond the 0.8650 region will be much more of a battle than any true break below 0.82954. In my opinion, that speaks volumes about the market’s perception of EUR/GBP.