The euro is closing in on the post-Brexit highs against the pound today and could be eyeing levels not hit since August 2008.
A weak performance in the pound towards the end of last week combined with a strong performance in the euro in the last couple of days has propelled the pair higher and could send it through the 6 July highs of 0.8628 very soon.
Should this happen then the next major zone of resistance could be found around 0.8770-0.8815, the highs from throughout 2013.
Whether the pair can break through the current resistance will depend on whether the pair can sustain the momentum that has seen it rise more than 3% in the last week.
The momentum indicators on the 4-hour chart suggest this is not currently an issue with the higher highs in price being matched by higher highs in the stochastic and MACD.
That’s not to say we won’t have a correction prior to the level being broken, just that currently the momentum remains very much with the bulls.
Should we get a correction then 0.8565-0.8585 could be key as a break below here would suggest bullish momentum has been lost and a broader correction is on the cards.
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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Craig Erlam
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