EUR/GBP Heading Towards 0.8940

Thursday, 31 March 2011 22:23

Ever since mid-February the EUR/GBP never ceased to push up and seems to be headed towards a re-test of last October’s high. Here, we explored one possible development scenario.

The 4-hour chart shows a perfect uptrend, capped within a channel. The EUR/GBP moves up at a very steady pace and show no sign of weakness. A new support level has formed at 0.8754 (S1), which establishes a new base for the continuation of the bullish move.

The daily chart confirms the long term trend. There is no MACD divergence to be seen and the bull candles show a great momentum. Hence, we can only try to guess when it will stop. And for that, we look at the closest resistance level, which appears at 0.8940.

A bounce off that level is very likely and could open the path for a cup and handle pattern and allow the price to continue its way up.

Any short term retracement could be a buying opportunity with a stop-loss below 0.8754 and a target profit at 0.8940