EURGBP Defends Key Support

All the spotlight is on gold and oil this week, but interesting setups are also happening on other instruments. In today’s technical piece, I would like to analyze the situation on the daily chart of EURGBP, where we can see the price bouncing off a key horizontal support.

Yesterday, EURGBP dropped significantly in the first half of the day and tested the combination of two crucial long-term supports. The first one was the long-term uptrend line, connecting higher lows since August 2022 (black), and the second one was the horizontal support, connecting key lows from the whole of 2023 (green).

The green area is not just that. In addition, it serves as a neckline of a big Head and Shoulders pattern (yellow). The H&S formation is bearish and usually promotes a downtrend, but only after the breakout of the neckline. Therefore, holding the price above this area should be the main task for the buyers.

As long as we stay above those two supports, the sentiment remains positive. It would be additionally strengthened if the price were to break the mid-term downtrend lines (blue), but it is still uncertain. A price break below the green area would be a proper sell signal, but I do not think it will happen in the coming days.

Source: https://www.axiory.com/analytics/technical-analysis/eurgbp-defends-key-support