The EUR/GBP is currently trading at a significant intersection at 0.75. This happens to be the neck line of a potential 500 pip bullish ‘Inverse H&S’ pattern. I’ve been reading today about how some are still forecasting EUR/USD to possibly head to parity. well, if both these scenarios evolve then that spells a lot of gloom for the GBP!
Chinese Trade Balance data has just been released and was better than expected. Some comments suggest that this data shows the Chinese economy stabilising rather than collapsing as exports rise whilst the import slump is moderating. The phrase ‘Recovery Signs’ was elaborated on within this article as well. I do laugh, though, when I read Tweets etc suggesting that any positive Chinese data must be rigged whereas weak Chinese data proves a market crash is looming. I’m not sure where the truth of the facts rest here BUT, one thing I do know for sure, you can’t have it both ways!
Anyway, back to the EUR/GBP.
EUR/GBP monthly: this chart suggests a bullish bias is warranted for the EUR/GBP as price has bounced up off triangle trend line support in a ‘Double Bottom’ kind of way and the bullish ‘Inverse H&S’ can also be seen:
EUR/GBP weekly: the bullish ‘Inverse H&S’ is much clearer on this chart and, interestingly, the 500 pip target for this technical breakout move would put the pair up at previous S/R near 0.80. Note the uptick with the ADX (black line) and + DMI (green line) as these support a bullish bias.
EUR/GBP daily: price action is currently raging a bit of a battle at the 0.75 level:
EUR/GBP 4hr: no new 4hr based TC signal yet. Note how the ADX (black) and + and – DMI lines (green and red respectively) are trending down at the moment though. Thus, we might have to wait a bit longer for any breakout move here!
Summary: Whether the EUR weakens against the US$ remains to be seen but it looks like it could give a bit more of a fight back against the GBP. This wouldn’t surprise me too much given the Brexit issues troubling the UK at the moment. I’m watching for any new TC signal on the 4hr charts.
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