Last week, bears took charge and pressed EUR/GBP to a multi-week low. However, bears look weaker this week. Will bears keep controlling the price action or will bulls come back?
Euro vs GBP Technical Overview
- EUR/GBP price bears in charge
- Bearish outlook while below 0.9014
EUR/GBP: Bears Pullback
Last week, Euro hit a four-week low against the British Pound at0.8944. However, the price rallied and closed a weekly candlestick modestly in the green with a 0.1 % gain, as some bears seemed to cover.
Alongside that, the Relative Strength Index (RSI) remained below 50 signaling that bearish momentum was still intact.
EUR/GBP Daily Price Chart ( October 14 -November 12, 2020 )
Chart Source: Webtrader, Capex.com
On October 27, EUR/GBP closed below the 50-day SMA and since then the price has failed on multiple occasions to overtake this indicator highlighting that bears were in charge. This week, the price failed twice to close below the low end of the current 0.8893 - 0.9014 and rallied eyeing a test of the high end of the zone.
A daily close above the high end of the zone at 0.9014 could end the bearish sentiment and may send the pair towards the weekly resistance at 0.9131.
While any failure in closing above the high end of the zone could reverse the current move towards the low end of the zone at 0.8893.
EUR/GBP Four Hour Price Chart ( October 26 -November 12, 2020 )
Chart Source: Webtrader, Capex.com
On November 4, EUR/GBP traded above the slopping bearish trendline originated from the October 26 high at 0.9104 and generated a bullish signal. However, the price declined after and started a downtrend move creating higher lows with lower lows.
To conclude, the bearish momentum seems weaker, and break above the downtrend line originating from the November 5 high at 0.9067, could correct the price higher. Therefore, a break above 0.9053 may cause a rally towards 0.9131, while a break below 0.8837 could send EUR/GBP towards 0.8777. As such, the support and resistance levels underlined on the chart should be kept in focus.
The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.
As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).
The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.
JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors