Reverses the gains from yesterday...
Yesterday was about a rally higher in the EURGBP. The pair had a couple of legs to the upside, but when the move higher in the US PM session stalled before the high for the day, traders started to consolidate.
Today, a surge higher failed once again to extend to new highs and once the 100 and 200 bar MA on the 5-minute chart was breached in the European session (helped by the EURUSD tumble), the EURGBP followed.
Now what?
The price has moved below the 100 and 200 hour MAs which are converged at the 0.7024 level. This is now resistance for the pair. That is the bearish news and indeed the price has moved lower to a low price of 0.7002.
The low is providing some support for a couple reasons.
- The 0.7000 level is a nice natural support level.
- A correction swing low on Monday stalled at the level before moving higher.
- The pair is in the middle of the consolidation area that stalled the fall from November 17th until yesterday's surge higher.
So we have returned to the "scene of the crime" or at least the area where buyers and sellers fought it out. So there could be some support buyers at the current levels with stops below the 0.7000 area.
