EUR/GBP Price Analysis: Bounces off range low

Source Fxstreet
Apr 30, 2024 12:02
  • EUR/GBP price has fallen to the floor of a multi-month range and rebounded off support. 
  • It is now poised to begin rising back up inside the channel continuing the sideways trend. 
  • The MACD indicator is poised to cross its signal line giving a buy signal, reinforcing the new up move. 

EUR/GBP price has fallen to 0.8530, one pip above the base of a multi-month range at 0.8530. 

The pair has bounced off the support from the range low and is trading back up at 0.8547 at the time of publication.

EUR/GBP 4-hour Chart 


 

EUR/GBP is in a sideways trend which is forecast to continue until a directional bias proves otherwise. It will now probably start rising back up inside the range towards resistance from the cluster of Moving Averages in the 0.8560s. If it successfully breaks above them it will probably continue up to the ceiling of the range at roughly 0.8595. 

The Moving Average Convergence Divergence (MACD) indicator looks like it is poised to cross above its signal line. If it does it will give a buy signal and suggest more upside increasing the probability of a rally within the range. The signal would be improved by the fact the pair is in a sideways trend and MACD is proven to be a more reliable indicator in non-trending markets. 

A decisive break below the range low would open the way for more downside to the next target at 0.8486. This is the 0.681 Fibonacci ratio of the height of the range extrapolated lower from the channel’s base. This is the method used by technical analysts to estimate range breakouts. Further weakness could even see price reach the next target at 0.8460, the full height of the range extrapolated lower (1.000). 

A decisive break would be one characterized by a long red candlestick that broke completely below the range floor and closed near its low, or three consecutive red candlesticks that broke clearly below the level. 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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