Chart of the week – EUR/GBP
EUR/GBP major bearish breakdown from 5-year range
Short-term technical analysis
Source: CMC Markets
- Last week, the EUR/GBP cross pair has staged a bearish breakdown below its major range support of 0.8320 which is the lower boundary of a 5-year sideways range configuration in place since October 2016 high. The upcoming key risk event for EUR FX pairs will be the ECB monetary policy decision out on Thursday, 10 March.
- It is now evolving within a major descending channel from September 2020 high and its lower boundary is acting as a support zone of 0.8065/7930 which also confluences with a Fibonacci retracement/expansion cluster and the former swing high areas of September 2014/April 2016.
- In the shorter-term, the EUR/GBP may shape a minor bounce first before its resumes its potential impulsive down move sequence as the 4-hour RSI oscillator has reached its oversold region.
- If the 0.8320 key medium-term pivotal resistance is not surpassed to the upside, EUR/GBP is likely to see another potential drop towards the next supports at 0.8180 and 0.8065.
- However, a clearance with a 4-hour close above 0.8320 negates the bearish tone for a more pronounced corrective rebound towards the next resistance at 0.8410 (the upper boundary of the major descending channel & 26 February 2022 swing high).
