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EUR/GBP Stuck in Sideways Range, Potential Breakouts on Horizon

The EUR/GBP currency pair is currently trading in the 0.8560s, within a well-established multi-month range.

Sideways Trend Prevails

  • The pair has been oscillating within this range for a significant period, suggesting indecision in the market.
  • “The trend is your friend” adage advises staying with the dominant trend, which in this case is sideways.

Support and Resistance Levels

  • EUR/GBP recently approached the range ceiling but reversed course.
  • Support lies at the cluster of 50, 100, and 200-day SMAs (Simple Moving Averages) around 0.8565.
  • A break below this support could lead to a decline towards 0.8530.

Technical Indicators Offer Mixed Signals

  • The MACD indicator, although briefly bullish, is now turning lower.
  • A confirmed break below the signal line could indicate further downside for EUR/GBP, especially given the sideways trend where MACD is more reliable.

Looking for a Trend Change

  • A decisive breakout above or below the range boundaries is needed for a confirmed trend shift.
  • A break below the range floor could open the door for a drop to 0.8486 or even 0.8460.
  • Conversely, a breakout above the range ceiling could see EUR/GBP rise to 0.8635 or potentially reach 0.8645.

Confirmation of Breakouts

  • A decisive breakout requires a clear candlestick pattern, such as a long candle closing near its high/low after breaching the range, or three consecutive candles moving in the breakout direction.