The EUR/GBP dropped significantly today and has managed to resume the minor downside movement, right now is pressuring a crucial dynamic support, a drop below this level followed by a retest will open the door for more declines. Has decreased sharply after Friday’s indecision, we had low activity on this pair in the previous week. However, we still have to wait for a valid breakout, could approach also the 0.8350 psychological level in the coming days, we have a very strong support area near this level.
The pair will be driven by the fundamental factors tomorrow as the Unite Kingdom and the Euro-zone will release high impact data, most likely we’ll have a high volatility on this pair in the European trading session, so will be better to keep an eye on the economic calendar. The economic calendar is filled with high impact data, the pair is somehow expected to decrease further, but the price could increase again if the fundamental factors will support this movement.
The Unitetd Kingdom is to release the inflation data, a disappointment will punish the Cable, which will drop sharply versus all its rivals, not only versus the Euro.
The rate has dropped and now is challenging the median line (ml) of the major ascending pitchfork, this line represents a very strong dynamic support, a drop below this level will attract even more sellers, which will force the price to drop sharply in the coming weeks. We have another support level at the 76.4% retracement level a breakdown below this level followed by a retest will validate the Head and Shoulders pattern, you can see on the Daily chart that the price action has developed a chart pattern that awaits confirmation. If the Head and Shoulders will be validated, than the price will decrease significantly in the coming period, is expected to drop further as long as is trading inside the descending pitchfork’s body, could be attracted by the median line (ml) of the minor descending pitchfork and also by the lower median line (LML) of the major ascending pitchfork, so technically should drop significantly.