The 4H EUR/GBP chart shows trading within a declining wedge since the 0.8150 resistance. The latest drop occurred during and after today’s BoE and ECB meetings, where the BoE held rates but expanded its QE program, while the ECB cut the benchmark rate to 0.75%, a historical low, while dropping the deposit rate to 0%.
As we get into the Asian 7/6 session, the market sits above the day’s low of 0.7965. The pair is near a confluence of the wedge pattern support, and the previous support pivot/2012-low at 0.7950, shown on the daily chart.
Before jumping on the range-trading play, note that the previous trend has been bearish, since July 2011 from 0.9080. The daily RSI reading stayed below 60 after digging below 30, this shows maintenance of the bearish momentum in this time-frame especially if the RSI dips below, which is likely to coincide with price action falling below 0.7950. Finally, moving averages are in bearish alignment with the 200-day above the 100-, then 55-, 21-, and finally 8-day moving averages.
For now, we should probably limit the bullish outlook to the wedge resistance, at about 0.8050, or lower like 0.8030 if the market rallies there in laborious manner.
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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