EUR/GBP Weekly Outlook – Forex Action

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EUR/GBP’s rebound from 0.8338 resumed last week breaking through the resistance at 0.8491. The current development argues that the choppy fall from 0.8720 may be over. The initial bias is now to the upside this week for a 100% projection from 0.8338 to 0.8491 from 0.8386 to 0.8539. A firm break will confirm this bullish scenario and cause an upward acceleration towards a projection of 161.8% at 0.8634 and above. On the downside, the break of 0.8386 will resume the fall from the 0.8720 low to 0.8338 low.

Overall, the medium term downtrend is held with prior rejection by a 38.2% retracement from 0.9499 to 0.8201 to 0.8697. The breakout of 0.8201 will resume a broader downtrend from 0.9499 (2020 high). Nonetheless, a sustained break of 0.8697 will confirm that the rise from 0.8201 is itself a medium-term uptrend.

In the longer term, the lack of medium-term bearish momentum suggests that the fall from 0.9499 (2020 high) is just a correction to move up from 0.6935 (2015 high). In case of further decline, the decline should be contained by a 61.8% retracement from 0.6935 to 0.9499 to 0.7917 to bring a bounce. A sustained trade above the 55-month EMA (now at 0.8591) will signal that the correction is over and bring a retest of 0.9499.

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