EUR/GBP 1H chart 9:20AM EST 1/15/2013
Consolidation range: EUR/GBP has been bullish so far in 2013, rallying from January’s low of 0.8085 to 0.8325 this Monday (1/14). Since then, we had another couple of attempts fail to break the 0.8325 high. The RSI has also drifted lower between 40 and 60, reflective of consolidation momentum in the 1H time-frame. On the other side, there has been support shown near a previous resistance, at 0.8295, making a consolidation range between 0.8295 and 0.8325.
Breakout scenarios: As EUR/GBP nears support, let’s first consider breakdown scenario. A break below 0.8290 shows topping. A pattern breakout projection targets 0.8265. We also have a previous support pivot right there at 0.8266. The bearish outlook has more weight, if the 1H RSI can clear below 40, a sign of lost bullish momentum.
However, a push back above 0.8325 opens up bullish continuation scenario. A conservative breakout target would be 0.8360. This also continues a bullish outlook that has the 2012-high near 0.85 in sight.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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