EUR/GBP long-term technical analysis

The focus of the world has shifted from Brexit to coronavirus. Although the mortality rate is low, the rate of infection is alarming. Lockdown or social distancing applied by the countries which automatically shut-off operations for most companies. It is the damage toward the economy which traders and investors might worry about.

At the current time, China is the first to reopen its economy while facing the second wave of infection. Europe, America, and other countries soon will follow-suit. Depend on the situation, if a new wave of infection happens then it might create further damage to the economy.

EUR/GBP currently under pressure. The pressure might be more apparent in the Euro compared to the UK. We might see further weakness in the currency as long as there is no improvement in the coronavirus situation.

New Month

Monthly chart

EUR/GBP launched upward above 0.9300 in March and printed new high above 2019 high. However, the upward movement reversed and the pair closed near 0.8900 at the end of the month. The trend then turned bearish in April where the price closed lower below 0.8750.

This month, the pair currently trying to move back above 0.8750 but no luck yet. If the pair continues to trade below the resistance level then it might start moving lower toward 0.8400.

Weekly chart

EUR/GBP protected near the 0.8700 – 0.8750 area and currently consolidating near the area. No indication of bounce or breakout yet at the current time. If the pair could bounce then 0.8900 will become the upward target. On the other hand, if a bearish breakout happens then 0.8325 – 0.8400 will become the target.

Daily chart

A breakout bound to happen but which direction the breakout will happen? We think EUR/GBP takes a long time to bounce from the 0.8700 – 0.8750 area. It means the pair has more possibility to breakout lower and continue the bearish movement.

Traders will wait for an actual breakout to happen before placing any major positions.

Trade plan

The long-term map might have changed under the current situation as coronavirus hitting the world economy. European zone is under trouble after Brexit which might put Euro under more risk than Pound sterling. EUR/GBP currently testing the support area around 0.8700 – 0.8750 and there is no major reaction yet.

The longer the pair stick near the area, the higher the chance for a bearish breakout. If the bearish breakout happens then traders could use the area to enter short positions on retest with 0.8325 – 0.8400 as a target.