Forex Market: EUR/GBP trading outlook

Yesterday’s trade saw EUR/GBP within the range of 0.6985-0.7034. The pair closed at 0.6995, shedding 0.51% on a daily basis, while marking its third consecutive trading day of losses. The daily low has been the lowest level since August 6th, when a low of 0.6966 was registered. In weekly terms, EUR/GBP lost 0.85% last week, marking its sharpest weekly drop since the week ended on November 1st.

At 11:04 GMT today EUR/GBP was up 0.17% for the day to trade at 0.7008. The pair touched a daily high at 0.7020 at 8:25 GMT, undershooting the upper range breakout level (R4). The pair has been holding below the weekly central pivot level for a third straight trading day.

EUR/GBP has been in a steady decline since mid-October, which led to yesterdays three-and-a-half-month low. Both the Bollinger and the RSI have indicated oversold conditions, while the MACD have shown stagnating bearish momentum. The pair may next attempt to test the middle Bollinger band in the area around 0.7030-0.7035 and if it encounters resistance there and holds persistently between the lower and the middle bands, this may be a suggestion of downward move continuation. If that is the case, a second test of November 17th low seems probable. A break and close below it may send the pair down for a test of August 6th low.

In case, however, EUR/GBP manages to breach and closes persistently above the middle Bollinger band, the move up may be halted within the area enclosed by the 23.60% and 38.20% Fibonacci levels, which reflect the descent from October 13th high to November 17th low.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for EUR/GBP are presented as follows:

R1 – 0.6999
R2 – 0.7004
R3 (range resistance) – 0.7008
R4 (range breakout) – 0.7022

S1 – 0.6991
S2 – 0.6986
S3 (range support) – 0.6981
S4 (range breakout) – 0.6968

By using the traditional method of calculation, the weekly pivot levels for EUR/GBP are presented as follows:

Central Pivot Point – 0.7090
R1 – 0.7142
R2 – 0.7208
R3 – 0.7260

S1 – 0.7024
S2 – 0.6972
S3 – 0.6906