Channel: Following up with the previous update, the EUR/GBP indeed appears to be in a bullish trend, but it now retreating after failing to sustain a break above the 0.81 handle. It consolidated a bit coincidentally at the rising channel resistance, before falling during the 11/27 session.
Correction: The correction is bringing the EUR/GBP toward the upper bound of the previous consolidation area between roughly 0.8005 and 0.8060. Falling to 0.8030 (middle of this range), would still likely stay just inside the developing bullish channel. A break below this channel support and the middle of the previous range takes away the bullish outlook. Also, if the RSI in the 4H chart can hold above 40, the bullish momentum is still in play.
Outlook: the outlook for now remains bullish with a correction at hand. If this is true, there should be support in the 0.8040-0.8050 area and the RSI should hold above 40. Below 0.8030, this outlook is not likely, and below 0.80, the outlook starts to shift to the bearish mode, especially if it breaks below a rising trendline that goes back to July lows. Also, the break would expose a bearish outlook to those July lows.
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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