EUR/GBP bears have taken solid control of the pair, but will they have enough to break the fast approaching previous support area? Or is a buying opportunity ahead for the bulls?
Selling Momentum in EUR/GBP?
I’m eyeing EUR/GBP once again since the pair has finally made moves from the resistance pattern I was watching a few weeks ago around the 0.8700 handle. Since then, the bears have taken the reins on the market, pushing the pair lower, enough to break its recent consolidation behavior and pick up speed to the downside.
With volatility picking up and the market favoring Sterling at the moment, traders may want to consider this a legit downside break for a very short-term play targeting the previous swing lows around 0.8450 – 0.8500.
This makes sense fundamentally given that we just got a round of net better-than-expected U.K. data (U.K. economy contracted 1.5% in Q1 2021 vs. projected 1.6% drop in GDP, U.K. industrial production rose 1.8% vs. projected 1.0% increase), and on the idea the U.K. has managed the pandemic better than the EU in terms of cases per 100K and deaths per 100K.
We could see a retest of the 0.8500 area by next week, and if that’s the case, support may form around there as traders get ready for the latest round of European business sentiment data, which may continue to show improvement as their vaccine rollout gathers pace.
Overall, we’re thinking EUR/GBP has a few short-term trading opportunities ahead for both the bulls and the bears if these scenarios play out. But the big scenario to watch going forward is how vaccination and cases/deaths in Europe are developing and if business surveys show optimism next week. If not, than that support area around 0.8500 could easily break and draw in more sellers, both technical and fundamental players.
What do you all think? Do the bears have the bulls by the horns in EUR/GBP? Or will the bulls take charge around the previous support area and hold the line? Let me know in the comments section below!
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