There is a lot for traders to consider when pricing the Euro against the Pound. Politics plays a major part, with the relative impacts of Brexit and the German and Italian elections all in the mix. This has seen EURGBP oscillating within a range over the past 6 months and that might now be presenting an opportunity for traders.
Euro has had the upper hand in recent weeks and price has arrived back at the resistance line.
A couple of factors make this resistance potentially significant:
- It is supported by an ab = cd harmonic point at the same level
- The slow stochastic has just flicked back the overbought level above 80%. Typically of many trading ranges, the pattern in recent months has been for the trend to turn soon after it becomes overbought or oversold
Another rejection of the resistance line would be signalled if the daily candles change trend, starting to make lower lows and lower highs. That could set up for a potential return to the trading range support line.
If the opposite happens and EURGBP breaks clearly out of the trading range, a deeper retracement rally towards the major high at 9307 will be in prospect