EUR/GBP Nears 0.85 Resistance: Bullish or Bearish Break?

By Tomasz Wisniewski|

Published: July 02 2024, 05:41 GMT+0

EUR/GBP Nears 0.85 Resistance: Bullish or Bearish Break?


In today’s technical analysis, we are focusing on Euro to British Pound (EUR/GBP), which is currently testing a critical horizontal resistance. The price is trading just below the 0.85 resistance level, marked in yellow. Historically, this level acted as strong support, but it was breached in early June, and now it is being tested as resistance for the first time during this corrective phase. This correction is forming a flag pattern, delineated by green lines, and yesterday’s session saw a rejection from both the horizontal resistance and the flag’s upper boundary.

This rejection creates a promising short-selling opportunity as long as the price remains below the 0.85 resistance. The probability of a downside breakout from the flag pattern appears higher. A break below the lower boundary of the flag would confirm the sell signal. However, if the price manages to breach the yellow resistance, it would invalidate the bearish outlook and signal a potential buy. The initial target in this scenario would be the convergence of the green horizontal resistance and the black downtrend line.

Should the price move above 0.85, it is likely that bullish momentum will increase, potentially leading to a breakout of both aforementioned resistances. However, until such a move occurs, the sentiment remains bearish as long as the price stays under the psychological barrier of 0.85. Traders should closely monitor these key levels to determine the next significant movement in EUR/GBP.