Good day, dear traders!
We have not considered the euro/pound cross rate for a long time, and today we will pay attention to this tool. Basically, the analysis of EUR/GBP will be of a technical nature, but the topic of Brexit, no matter how you look at It, will not be able to avoid it.
At the moment, especially after the compromise born in agony at the four-day summit of the heads of countries that are members of the European Union, the fundamental component for the single European currency seems more favorable than for the pound. As for the "Briton", the risks associated with the UK's exit from the European Union remain. How exactly the Cabinet of British Prime Minister Boris Johnson will complete the Brexit process from the EU and set the points on all the remaining unresolved issues can only be assumed. However, there is still plenty of time to reach final agreements. There would be a desire to reach compromises. Let me remind you that the procedure for the United Kingdom's withdrawal from the European Union should be fully completed by December 31 this year. The question is whether the parting parties will have the political will to reach all the agreements on the disputed issues and put all the dots on them.
For now, all rounds of negotiations between the parties to the divorce process are postponed to a later date. At the same time, Brussels believes that the Brexit procedure should be completed in October. However, it remains likely that the UK will leave the EU without a deal. In principle, this is the main risk for the British economy and the exchange rate of the national currency. In my personal opinion, Boris Johnson is quite a complex and unpredictable negotiator. We will see what will be the final outcome of the divorce process between the UK and the EU and we will not wait long. And it's time for us to move on to the EUR/GBP cross-rate charts.
Weekly
As can be clearly seen on the weekly chart, the pair fairly shakes from side to side and the euro/pound has been trading in a wide range of 0.8275-0.9500 since the second half of 2016. In April this year, the cross found strong support at 0.8670, after which it shows mainly upward dynamics. Naturally, there are no kickbacks.
So, the nearest resistance passes at 0.9174. If the EUR/GBP bulls manage to close the week above this level, it is highly likely that its breakout will be considered successful. In this case, the road will open to the next strong resistance of sellers, which passes in the area of 0.9323. As you can see, the previous attempt to break through this level was not successful. Despite a significant flight of the price higher, to the psychological level of 0.9500, there was a strong rebound down. We had to start all over again.
Daily
At the end of the article, the pair is trading near 0.9100 and is trying to go up from the triangle marked with pink lines. Here we would like to draw your attention to the fact that triangles are rather insidious figures of technical analysis. Often, the initial exit to one side of such a figure is false, after which the price turns in the opposite direction and truly exits the triangle.
Daily resistance is seen at 0.9136. As you can see, this level has already been tested for breakout three times, but each time it kept the quote from further growth. The breakdown of the Tenkan and Kijun lines of the Ichimoku indicator implies that they provide strong support, therefore, in the event of a rollback to the 0.9070-0.9055 price zone and the appearance of bullish candlestick analysis patterns there, a signal for opening long positions in eur / gbp will appear on the daily four-hour and (or) hourly charts. Earlier, aggressive and risky purchases can be tried from the 0.9100-0.9080 price zone. In order to avoid possible corrective pullbacks, I recommend taking profits in the price area of 0.9135-0.9170.
At the same time, the appearance in the price zone of 0.9115-0.9135 of bearish candle reversal patterns on the four-hour and (or) hourly charts should be perceived as an opportunity to sell a cross with the nearest goals near 0.9077.
Good trading and a good weekend!