The EURGBP made a break higher today and in the process extended above the high of a swing area between 0.8583 and 0.85877 (SEE video from yesterday here).
The price of the EURGBP has been confined to a range over the last six or so trading days between 0.8546 and 0.8587. The break to the upside – and outside the range – was met with upside momentum with the price peaking at 0.8608. That high was just short of a swing area between 0.8609 and 0.86136. Going forward, it would take a move above that swing area to open the door for further upside momentum.
On the downside, I will be watching the broken high ceiling between 0.8583 and 0.85877 for bullish/bearish clues. If that level holds support now, the upside buyers remain in control. Conversely, iIf buyers cannot hold that level and the price moves back into the trading range between 0.8546 and 0.8587, I would expect the “break buyers” today, to be disappointed and push the price back to the downside.
Fundamentally, the ECB and the BOE will announce rate decisions on Thursday. The expectations are for both to keep rates unchanged. Overall, however, the market is expecting the ECB to be more dovish going forward (down the road into 2024). That should be bearish for the EURGBP. However, technically at least in the short term today, the buyers are exerting more control on the break. Watch 0.85877 though for short-term clues to see if those buyers can keep the momentum to the upside going.
This article was written by Greg Michalowski at www.forexlive.com. Source