EUR/GBP maintains a choppy tone and above 0.8703 can see a retest of key price and “neckline” resistance at 0.8721/32. Beyond here would now see a “head & shoulders” base established to mark a more important turn higher, according to economists at Credit Suisse.
Choppy price action rekindles thoughts of a potential base
“EUR/GBP maintains a near-term choppy tone and the failure to follow-through to the downside following its recent bearish ‘reversal day’ and subsequent recovery rekindles thoughts of a potential basing process. Above 0.8703 can add weight to this view for a retest of key price and ‘neckline’ resistance at 0.8721/32.”
Beyond 0.8721/32 would now see a ‘head & shoulders’ base established to mark a more important turn higher with resistance then seen initially at the 38.2% retracement of the fall from December at 0.8761 ahead of 0.8793/99 and then more importantly at the ‘neckline’ to the medium-term top at 0.8851/61.”
“Support moves to 0.8647/44 initially, with a break below 0.8634 needed to ease the immediate upside bias for a fall back to 0.8613, then the 0.8588/78 recent low.”