EURGBP forex technical analysis

EURGBP has been no stranger to the wild moves lately and it's the perfect example of looking at a move and judging whether the real trend has changed, or whether the moves have just given an opportunity to add to positions at choice levels

Through all the volatility the easiest question to ask of this pair is "has anything fundamentally changed between Europe and the UK?". You can strip out China, and the US and keep the questions simple

So far the answer is that nothing has changed so any moves that go against the recent trend can be viewed as an opportunity, particularly if they stay within the technical boundaries

EURGBP daily chart

The top side boundary speaks for itself at 0.7375/90. That area has been a decent S&R level throughout this year and is a level that goes back to 2008

The downside is also quite clear with the support from 0.7100/15 down to the Jan 2007 support line at 0.7040 and the lows sub 0.7000. There's enough tech both sides of the trade to keep short term and longer term players happy

Where does it go from here?

Given Praet's comments yesterday there's certainly a reason to see further downside. I don't think the ECB is going to increase QE but we've just had a big fat clue that they might talk about it. The Fed rate game is still ongoing and so the main driver via EURUSD is still in play

There's a strong chance that when the Fed do finally make their move, and the elephant finally leaves the room, the dollar reverses which will mean EURUSD could rise. That may not have the usual drag effect on EURGBP though as the focus will then switch to the BOE. The danger to shorts comes from when the UK elephant leaves the room

Shorting EURGBP has been a great trade for me and I'm still happy to be in it but time is possibly running out on the trade. There's probably still a good many months left in it but I would like to see the lower levels tested again to see how they react. If they hold again then that's another signal that maybe it's time to think about easing out of all the position