EURGBP has been highly puzzling and turbulent but has been dipping especially ahead of European elections are nearing.
On weekly plotting, the pair has formed head & should pattern with the head at 0.9270, 1st shoulder at 0.8725 and 2nd shoulder at 0.8852 levels. This bearish pattern is most likely to bring in more dips in near future.
The current prices on this timeframe are well below WMAs with bearish WMA crossover (7WMA crosses below 21WMA).
Please be noted that the stiff resistances on the major uptrend are 0.9061 and 0.8823 levels (refer monthly charts).
Shooting star occurred at 0.8580 levels that’s where we could see stiff resistance to signal more weakness. Historically, one could easily make out as to how the uptrend has reversed as and when it approaches the above-mentioned resistances.
More slumps are likely if the prevailing bears manage to drag and break neckline of head and shoulder pattern where bearish WMA crossover indicates this bearish event seems to be probable (see weekly).
RSI on both weekly and monthly evidence downward convergence with the price slumps that signals strength in declining trend.
While stochastic curves on weekly have been indecisive, bearish bias on monthly as this leading oscillator evidences %D crossover right from the oversold territory.
MACD – this lagging indicator on weekly charts signals the price declines to prolong further in the weeks to come as it evidences bearish crossover.
Trading tips:
For intraday trading perspective, it is advisable to construct tunnel spreads on speculative grounds with upper strikes of 0.8550 and lower strikes of 0.8484 levels.
This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 0.8550 and lower strikes at 0.8484 levels.
