EURGBP has been in consolidation for the last three weeks with the upper end of the range being around 0.74 and the lower around 0.7250. Just below here it has additional resistance around 0.7220.
This consolidation has come since the pair rallied and broke back above the descending trend line that it initially broke below back in January.
It is unclear at this stage whether we’re seeing the pair topping out or just consolidating ahead of the next push higher. However, the break above that trend line and the confirmation it’s had since would suggest the market bias remains bullish.
With the pair rallying again over the last few days, a test of that could come quite soon but on this occasion, the upper bound could be increasingly protected by the bears.
On this occasion, not only is it the upper end of the three week range, it’s also the upper end of the descending channel that the pair has traded in for the last six months. The 233-day simple moving average could also provide additional resistance here.
If it reaches this level, the reaction at it will be very interesting. A break above would be very bullish and could prompt a significant move higher. Initial resistance could be found around 0.7483 – 7 May highs – but given the significance of the resistance level broken, this may prove temporary.
If the pair doesn’t break above 0.74 it would be the third failed attempt and could be viewed as being quite bearish. A move back towards the low end of the three week range – 0.7250 – would create a triple top.
If the neckline is broken then based on the size of the triple top, it could prompt a move towards 0.71.