Hantec: EUR to GBP Chart Shows Why the Bulls are Getting Ready to Buy

The British pound’s woes against the euro look only set to continue says a leading technical strategist.

The pound is being sold aggressively in the European Friday session as the Brexit summit extended to a second day.

“Even the solid retail sales data couldn’t give the pound a smile this morning,” says Ipek Ozkardeskaya at London Capital Group, “the political risks are hard to price in at the moment, yet there is clearly little appetite in building fresh long and/or short positions before more clarity on the issue.”

The market’s ability to simply ignore the strong turnout in the retail sales series confirms that the dearth of support for GBP created by the Brexit question is all-encompassing.

This provides perfect conditions for the markets to trade according to the charts.

Those who discount the relevance of charting need to catch a wake-up; real-life trades are placed at key levels based on the charts and the market gets an insight into how it - the market itself - is structured and where future moves will be triggered.

The ability of charts to propagate a ‘self-fulfilling’ prophecy can be uncanny at times and should not be ignored, particularly when important fundamental data releases are being completely overlooked.

With this in mind the chart of EUR/GBP has been in a trend channel for the past 3 months and “the recent consolidation could give another opportunity for the bulls,” says Richard Perry at Hantec Markets.

Perry believes the signals being given in the EUR to GBP are so significant he has named it the ‘chart of the day.’

“The channel support comes in today at £0.7655 which could be tested as the euro has come in for a degree of selling pressure in the past few sessions. However, there seems to be some interesting support around £0.7700 which is holding near term, whilst the rising 21 day moving average is also a basis of support coming in around £0.7685,” says Perry.

The medium term configuration of the momentum suggests to Perry that corrections are still a chance to buy and the daily RSI around 60 has tended to be where the bulls have returned in this strong trend.

“I would expect the euro bulls to regain control for a test of Wednesday’s high at £0.7845 and ultimately the recent rally high at £0.7897. Below £0.7700 would question the bull control,” says Perry.

PS: Copy signals and Earn on Forex4you - https://www.share4you.com/en/?affid=0fd9105