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Featured Trade: EUR/GBP held at key major support ahead of Brexit deal vote

Short-term technical outlook on EUR/GBP (08 Mar)



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Key elements

  • The EUR/GBP has staged an overnight decline of 200 pips from yesterday, 11 Mar European session high of 0.8676 to print a low of 0.8472 in today, 12 Mar Asian session in the backdrop of a new Brexit deal that U.K PM May has managed to strike with EU officials before being put to a parliamentary vote later today at around 1900 GMT.   
  • Yesterday’s drop of the EUR/GBP has managed to test the major “Symmetrical Triangle” range support in place since Dec 2016 low before it staged a bounce to challenge the recent former minor swing lows area of 27 Feb/08 Mar 2019 now turns minor pull-back resistance at 0.8535.
  • In addition, the daily RSI oscillator has traced out a bullish divergence signal at its oversold region since 25 Jan 2019 and the shorter term 1-hour RSI has just exited from its oversold region after it hit an extreme oversold level at 22. These observations suggest that the recent downside momentum of price action has started to ease.
  • The key pivotal support will be at 0.8465 which is defined by the major “Symmetrical Triangle” range support and a Fibonacci retracement/expansion.
  • The next significant intermediate resistances will be at 0.8675 follow by 0.8725 (the minor swing high areas of 11 Mar/22 Mar 2019 & close to 61.8% Fibonacci retracement of the entire recent slide from 14 Feb 2019 high to 12 Mar 2019 low)   

Key Levels (1 to 3 days)

Intermediate support: 0.8500

Pivot (key support): 0.8465

Resistances: 0.8535 (trigger), 0.8675 & 0.8725

Next support: 0.8310

Conclusion

The recent decline of the EUR/GBP has reached a major support with signs of bearish exhaustion that advocate a potential minor mean reversion rebound at this juncture.

If the 0.8465 key pivotal support holds and a break above 0.8535 (an hourly close above it) may see a further push up to target the next intermediate resistances at 0.8675 and 0.8725.

On the other hand, failure to hold at 0.8465 invalidates the bullish scenario for a further decline towards the next support at 0.8310 (the swing low areas of 05 Dec 2016/18 Apr 2017)

Charts are from eSignal



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