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Fan Yang

EUR/GBP Breaks Below Key Support; Opens up the 0.8630 and 0.8320 Pivots

The last time I looked at $EURGBP, I thought it was confirming a bullish breakout. 

EUR/GBP - Bullish Breakout Confirmed; 0.91 and 0.93 in Sight

The market wasted no time proving me wrong as EUR/GBP got stuck under 0.90 and fell below the key support factors that initially held and showed bullish strength. 

EUR/GBP Daily Chart

(click to enlarge)

Support Confirmation Failure
- We had the bullish breakout in July and more clearly in August. 
- Then, we had a pullback at the end of August into early September.
- After tagging the 40 level, the RSI rebounded, along with a strong bullish candle. These are some of my favorite signs of bullish continuation.
- However ,price failed to extend above 0.90. After a few sessions drifting lower, EUR/GBP fell sharply last week to break below the key support factors (rising trendline, moving average cluster, RSI at 40). 
- Now price is under the movin a verages nad the rising trendline, and the RSI is below 40, approaching 30.
Support to Become Resistance:
- At this point, the 0.8850-0.89 area, should be considered resistance after it initially acted as support but then failed. 
Bearish Targets:
- If price indeed holds under 0.89, there should be pressure towards the 0.8630 low on the year from April. 
- A break below 0.86 would then open up the 0.8320 common support pivot, which was also the 2017-low. 

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