EUR GBP continues climb to approach major resistance

EUR/GBP (daily chart shown below) continued its sharp climb on Tuesday to approach major resistance around the 0.7450 level. During the course of the current one-week ascent, the currency pair broke out above a large flag pattern late last week, and went on to follow-through on that pattern break by further rising above previous resistance around the 0.7385 level.

The current rise for EUR/GBP comes at a time when the pound has recently shown exceptional weakness against other major currencies, most notably the US dollar, while the euro has lately shown resilience under pressure.

Since EUR/GBP made a new seven-year low of 0.6935 in July, the currency pair has been rising in a choppy uptrend that is outlined by an uptrend support line extending back to the early August low. This trend line has been closely tracked recently by the 50-day moving average, which has provided additional technical support for EUR/GBP.

This moving average also just crossed above the 200-day average in the past few days, creating what is known technically as a “golden cross.” A crossover of these two moving averages has not occurred for two years, when a downside cross, or “death cross” in September of 2013 signaled the early stages of what became a prolonged downtrend. A golden cross, in contrast, is a bullish indication that often signals impending upside price moves.

As EUR/GBP is currently approaching the noted 0.7450 resistance area, any sustained breakout above that level could then target the next major resistance objective around the 0.7600 level. The currency pair last traded at that level near the beginning of this year.