Conclusion for today’s EURGBP Analysis:
Price closing above 0.86758 implies continuation of the bullish price swing from 0.84719.
EUR GBP analysis for today is carried out on a 6 hour timeframe candle stick chart, with major attention drawn to price action between February 27, 2019 and April 16, 2019. Previous analysis is provided here.
The duration mentioned above saw the EUR GBP form a major bottom reversal pattern referred to as complex, inverted head and shoulders (or a head and shoulders bottom). It is referred to as “complex” due to the presence of more than one right shoulder (RS) in this case.
The implications of the complex, inverted head and shoulder are the same as that of a regular head and shoulder bottom. The bearish trendline drawn on the chart also helps provide the neckline for the bullish pattern.
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Confirmation of the pattern occurred with price closing above the neckline on April 16, 2019 with the EURGBP currently consolidating above the chart pattern.
The width of the pattern estimated as the y-axis (price) distance from the neckline to the Head (H) of the pattern can be measured and then projected on to the break out point. This provides the minimum expectation of a bullish price swing in the EUR GBP.
Also shown on the chart is the 50 moving average (MA) and 200 moving average (MA), with the former crossing over the latter to the upside. This is also argues for a bullish bias in the EUR GBP in conjunction with the chart pattern that is already confirmed.
Conservative strategies involve going long once and if price retraces back to its neckline or 50 MA and consolidates. Even more conservative is to buy on a breakout above 0.86758.
Use of the complex, inverted head and shoulders pattern to initiate a long (buy) position automatically implies using the price low of the head of the pattern as a stop loss i.e. the EURGBP must not close below 0.84719.
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