EURGBP – Hourly
Since the 12th of January, we’ve seen much choppy price action in the EURGBP cross, with Pound Sterling applying the more significant selling pressure. This shorter-term bearish bias is what we’ll be looking at in today’s Chart of The Day using the hourly time frame.
Firstly, we can see the initial DiNapoli target of 0.8854 or (T1) has already been achieved early today during the London session. The second target of 0.8823 (T2) is still active. Note both potential targets were calculated using the price points labelled (A),(B), and (C), respectively.
Next, we can see a divergence between the fast stochastic indicator and the MACD shown. While the stochastic just provided a buy signal, the MACD remains considerably bearish. Based on this data and the general view that the Pound is gaining strength, I suspect we may see a slight bounce around the current levels of 0.8851, mainly as it’s acted as support recently before the pair falls to lower levels.
To the upside, the recent high around 0.89 looks to be the central area of resistance for the time being. Of course, anything is possible in these Covid-19 times, especially with negative talks brewing across Europe over vaccine distribution. Still, GBP appears to be riding the choppiness more favorably at this stage.
Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg
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