EUR/GBP enjoyed the Pound’s collapse to break one technical barrier and bounce off the next one. Update on this interesting cross.
The British Pound began the week with a big collapse: GBP/USD fell below 1.50 and bounced off the support line at 1.4770. This collapse was also felt in the Euro. EUR/USD also had a bad start to the week, but maintained the major support line at 1.3423.
The major resistance line was at 0.8840. EUR/GBP broke below this important line at the beginning of the year, and managed to climb above it as GBP/USD went below 1.5350 near the end of last week. Note that the 0.8840 line had an important role in many occasions in the past.
Sterling’s collapse sent EUR/GBP above the next hurdle: 0.8970. This move stopped only at 0.9150, a peak at the beginning of December, 3 months ago. EUR/GBP hit this point and fell right back, stabilizing in a range between 0.90 and 0.91.
A resolution of the Greek crisis can push the cross higher. A break of 0.9150 will send EUR/GBP to encounter 0.9275, which was a peak during September and October. The next line is 0.9412, which was a peak in mid-October and also in March 2009. This makes it an important line.
The next line of resistance appears at 0.95. There were two attempts to break this line at the beginning of 2009, when EUR/GBP was aiming for parity. EUR/GBP parity was never reached, and continues to be a far point in the distance.
Looking down, a loss of 1.3423 for EUR/USD will also make it collapse. In such a case, if GBP/USD manages to hold on, the cross, EUR/GBP, might return to towards the 0.8970 line. A break of 0.8970 will lead the way to the strong support line – 0.8840. The next line of support is 0.8650, but a convincing break of 0.8840 is necessary beforehand.
This pair continues to supply action and to behave in a relatively predictive way. Support and resistance line are respected in a better manner than many majors.
I’ll continue following it…
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