This pair seems to be gearing up for a test of its descending triangle resistance.
Which way will it go?
Before moving on, ICYMI, today’s Asia-London session watchlist checked out the bullish triangle breakout on ETH/USD. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Asian shares advance slightly as Evergrande secures extension for $260M bond
New Zealand credit card spending down 12.9% in Sept
Crude oil rises but OPEC reluctant to boost production again
BOJ: Japan’s banking system stable but risks remain
Nikkei index falls around 2% ahead of general elections
UK public sector net borrowing at 21 billion GBP vs. 23.5 billion GBP estimate
ECB policymaker Visco: Supply chain issues could last much longer
Upcoming Potential Catalysts on the Economic Calendar:
U.S. Philly Fed manufacturing index at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
Eurozone consumer confidence index at 2:00 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: EUR/GBP
This pair formed lower highs and found support at the .8425 mark, creating a descending triangle on its hourly chart.
The bottom appears to be holding as a floor, so another test of the resistance might follow. But will it hold this time?The moving averages seem to suggest so, as the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside.
In addition, the faster-moving SMA lines up with the triangle top at the .8450 minor psychological level to add to its strength as a ceiling.
There are no major reports from the euro zone or the U.K. economy, so the consolidation might simply carry on.
However, Stochastic is just turning higher from the oversold region to suggest that buyers are taking over while sellers take a break. In that case, bullish momentum might be strong enough to bust through the triangle top!
If that happens, EUR/GBP could climb by the same height as the chart formation or roughly 60 pips.
Keep in mind that the U.K. printed weaker-than-expected inflation reports recently, so bearish sterling vibes might be present.