Head and Shoulders: The 4H EUR/GBP chart shows that a head and shoulders pattern is about to be complete. As we start the Friday US session (11/2) of the week, the EUR/GBP is trading around the 0.80 psychological handle, testing this H&S neckline. Failure to clear below 0.80, and a return above 0.8050 will be a bad sign for the H&S anticipation. (There is a short-term support/resistance pivot zone and the 200-4H-SMA in the 0.8038-0.8044 area). If the RSI is pushed above 60, it would also be a sign that the bearish momentum is failing to build up.
Rising trendline: The daily EUR/GBP chart shows the market also testing a rising trendline going back to the July low of 0.7756. The daily RSI reading is also at 40. A clear break below shows loss of the bullish momentum set by the rally since July. A break below the trendline, but failure to bring the RSI below 40 would be a sign of a false break down, especially if the EUR/GBP has the ability to push back above 0.8050.
Targets: 50% retracement at 0.7960 is also a previous resistance pivot. Then the 61.8% retracement at 0.7912 is near a previous support pivot around 0.7915. There is a swing projection toward 0.7920 as well.
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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