Pair made significant movement last Friday and broke above 0.886 crucial resistance area breaking ADR as well. Pair was supported well down on 0.867-0.97 area where most liquidty happened as each break down from 0.886-0.88 levels along with 20ema attracted more buyers. Both currencies can't rely on economic factors to support them at this current time, but EUR should strenghten more as we head back into risk off mood around the markets which doesn't hurt EUR nearily like it hurts GBP which is much more sensitive to risk aversion. Given the fact Eurozone is recovering a bit better from Corona virus and EU-UK trade negotiations are not doing well is also fundamentally driving pound lower against most majors. So far sentiment and fundamentals are hurting GBP more and I think that should continue throught the month at least.
SECULAR AND SENTIMENT ANALYSIS:
GBP was second worst performer last week and by 13p average it's now second worst, only behind NZD, while EUR keeps it's 13p gains for weeks despite that slump from past weeks. COT data is showing banks and institutions are still long EUR while it's quite opposite for GBP where they reduced longs by more than 20k contracts. Contrarian to them retail traders are buying pound at current levels which tells us it's contrarian view from the crowds. Such thing indicates that EUR/GBP should likely continue it's upside. By some brokers around 70-80% of retailers are short on this pair with -130~ pips loss on average.
PATTERNS AND TECHNICALS:
Daily range broke ADR and made 110 pips last Friday indicating volatility may rise next week. RSI is above 50 on daily and lower timeframes.
Strong bullish breakout candle on medium volume on daily.
Price is above 20/100ema/sma on all timeframes (W1 IS HIGHEST I LOOK)
Weekly candle breaking last 3w highs.
IDEAS AND ENTRIES:
Who missed the breakout or didn't want to risk potential gaps over the weekend should wait for 20-40 pips retracement. Pair might spike higher on open leaving such scenario more difficult to happen, but each retracement could be bought after new swing high is made and last swing low is not broken on 1h,4h timeframes. 0.89 is next potential support. Key support should be current swing low at 0.882 level.
0.886 which was last resistance lies 80 pips below current price and is 80% of DR and 90% of ADR, which means if price falls towards these levels we might wait 1+ day for good entry.
0.9 area is where pair should react first, but has potential to go 0.905 which is 100+ pips and where my initial TP will be. But I give this pair more potential, even 200 pips or more due strong technical breakout.
SECULAR AND SENTIMENT ANALYSIS:
GBP was second worst performer last week and by 13p average it's now second worst, only behind NZD, while EUR keeps it's 13p gains for weeks despite that slump from past weeks. COT data is showing banks and institutions are still long EUR while it's quite opposite for GBP where they reduced longs by more than 20k contracts. Contrarian to them retail traders are buying pound at current levels which tells us it's contrarian view from the crowds. Such thing indicates that EUR/GBP should likely continue it's upside. By some brokers around 70-80% of retailers are short on this pair with -130~ pips loss on average.
PATTERNS AND TECHNICALS:
Daily range broke ADR and made 110 pips last Friday indicating volatility may rise next week. RSI is above 50 on daily and lower timeframes.
Strong bullish breakout candle on medium volume on daily.
Price is above 20/100ema/sma on all timeframes (W1 IS HIGHEST I LOOK)
Weekly candle breaking last 3w highs.
IDEAS AND ENTRIES:
Who missed the breakout or didn't want to risk potential gaps over the weekend should wait for 20-40 pips retracement. Pair might spike higher on open leaving such scenario more difficult to happen, but each retracement could be bought after new swing high is made and last swing low is not broken on 1h,4h timeframes. 0.89 is next potential support. Key support should be current swing low at 0.882 level.
0.886 which was last resistance lies 80 pips below current price and is 80% of DR and 90% of ADR, which means if price falls towards these levels we might wait 1+ day for good entry.
0.9 area is where pair should react first, but has potential to go 0.905 which is 100+ pips and where my initial TP will be. But I give this pair more potential, even 200 pips or more due strong technical breakout.