As long as the euro cross sustains above 0.8470 (closing basis), we continue to favor being cautiously optimistic. The 0.8470 level is in focus for me. Any break and closed below would have me looking at the 0.8300 levels.
Euro cross bears dominated throughout November as the price continues to drag the cross lower towards 0.8500 levels. At close, the EURGBP down more than 100 pips in November 2019 and closed below 50MA (Monthly) for the first time since June 2016.
As the currency closed below 50MA (Monthly), the support becomes resistance.
There is not much to write about this week’s trend in terms of the technical landscape. It was down for four months in a row. The run last extended to five months between December 2014 to March 2015.
UK Consumer Confidence flatlines at -14 for November 2019, according to the latest Gfk report.
Joe Staton, Client Strategy Director at GfK, says: “In the face of Brexit and election uncertainty, consumers are clearly in a ‘wait-and-see’ mode.
Data preview: This week’s economic calendar is empty, focuses on UK election headlines.
Financial markets have revised their probability of a no-deal Brexit, and focus has shifted to the UK General election. Traders focus remains on the 12 December election and the GBP reaction on the outcome.
Nordea Markets said, “A big victory for Boris Johnson 12 December should be priced in by now in particular since Jeremy Corbyn almost committed political suicide on live-television last week.”
Danske Bank noted that “YouGov’s MRP model for upcoming UK general election predicts a comfortable win for Conservatives.” In a note last week, the bank cited that “Conservative majority is our new base case.”
EURGBP has formed a range of 0.8470-0.8700, and till the given range is broken on either side, the price will continue to remain sideways. One can trade the range (speculators) by buying near the lower end and selling at the higher end of the range or wait for the breakout on either side to get into the momentum and short-term direction. Overall the cross parks the brakes at the key support level, and once cross above the R1 at 0.8600; it can move swiftly till 0.8650 its R2.
Support at 0.8500-0.8470 and resistance at 0.8600 and 0.8650.
As long as 0.8470 is the support (closing basis), watch out for a decent bounce towards 0.8670 and 0.8800. The daily RSI has been recovering, and the oscillator is about to turn bullish. The weekly bullish RSI and oscillator on the weekly chart also suggest the price could find the near-term bottom.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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