Published: August 31st, 2021
The EURGBP is trading with a modest gain in the intraday session while the current price is near the 0.8565-70 level resistance. Moreover, this pair is trading above the 0.8547 support level for two consecutive sessions, pointing out buying pressure. Therefore, bulls await a strong breakthrough above the last three days’ trading range. The recent surge in the COVID-19 cases in the UK increased the bearish sentiment for the Pound against the relative performance of the European economy.
In addition, the shared currency remained supportive of the current selling bias in the US Dollar and the better-than-expected Eurozone inflation result. According to the most recent flash estimates, the headline CPI increased to 10 years high by coming at 3.0% year-over-year in August. Besides, the core CPI moved higher by 1.6% YoY in August against the anticipation of 1.5%. The upbeat data may decrease the buying possibility for a bit, but investors should closely monitor how the price is trading at the 0.8565-70 resistance level.
Let’s see the upcoming price direction from the EURGBP technical analysis:
EURGBP started the bearish movement at the beginning of 2021 that found its bottom at 0.8471 in April. Later on, the price corrected higher and tried to break below the April low in August but failed. Moreover, the price rebounded higher immediately and closed a daily candle above the 0.8547 event level. The dynamic 20 EMA is currently below the price and working as minor support. Therefore, as long as the price is trading above the 0.8547 event level, it is more likely to extend the bullish pressure in the coming days.
In the above image, we can see a daily chart of EURGBP where the price closed above the 0.8547 level with a bullish candle. After the breakout, the price holds its bullish pressure above this level with more than seven trading days. In the meantime, dynamic 20 EMA started to come closer to the price by providing minor support.
The MACD Histogram remained bullish for a considerable time in the indicator window but failed to make a new low. Therefore, based on this market context, a new high in the MACD histogram would increase the buying pressure towards the 0.8670 resistance level.
The H4 price became bullish after moving above the Cloud resistance on 16 August based on the Ichimoku Kinko Hyo. Later on, the price came lower and retested the cloud resistance before making another swing high. Currently, the price is above the cloud resistance while the Senkou Span A is above the Senkou Span B in the future cloud.
In the above image, we can see that the price is trading above the most recent intraday level 0.8572, where the dynamic Tenkan Sen and Kijun are below the price and providing support to bulls. Therefore, any bearish correction and rejection from dynamic Tenkan Sen may increase the bullish pressure in the coming days.
Moreover, the RSI remained bullish at the 70 levels, pointing out a strong bullish pressure. However, a bearish H4 close below the 0.8572 may start a correction towards the 0.8547 level, while further bearish pressure below the 0.8547 level may invalidate the current bullish possibility.
In the intraday chart, EURGBP got a strong bullish momentum after breaking above the intraday 0.8570 level. Moreover, the price moved above the intraday high volume level of 0.8571. Therefore, as long as the price is trading above the high volume level, it may make another high towards 0.8640 area.
In the above image, we can see the H1 chart of EURGBP where the price was rejected and moved higher from the dynamic 20 EMA and weekly vwap. However, the bullish pressure was very strong that created a gap between the price and dynamic levels. Therefore, a bearish correction is expected where bulls should find a discounted level between 0.8570 to 0.8547 level.
However, any sharp bearish movement below the 0.8547 level may alter the current market structure and take the price lower towards the 0.8500 level.
As of the above observation, EURGBP is more likely to extend the current bullish pressure if the price is trading above the 0.8547 level. Any intraday bullish pressure from 0.8570 to 0.8547 level may take the price higher towards 0.8670 resistance level.
On the other hand, a bearish H4 close below the 0.8547 level may alter the current market structure and take the price lower towards the 0.8500 level.