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Fan Yang

EUR/GBP Entering a Multi-Year Range

The EUR/GBP has been falling sharply. After stalling around 0.7750 for a few months, the pair break lower at the start of 2015. After breaking 0.7750, the pair dipped faster and has just cracked the 0.71 handle. 

EUR/GBP Monthly Chart 
(click to enlarge)

The monthly chart shows that in March, EUR/GBP has broken into a range between 0.6540 and 0.7255, which contained price action from most of 2003 through most of 2007. 

While 0.70 is a psychological level, we should not have high hopes for a reversal here. There is still downside risk towards the 0.6540 low. Now, if we start seeing a bullish divergence in the monthly chart as price pushes lower into the 5-year range, then we can expect a bullish correction. 

The most aggressive bullish outlook at this point should be within the context of a bullish correction. If so, the 0.77-0.7750 common support area could become a key resistance. Thus we should limit any pending bullish outlook to 0.77-0.7750. 

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