EUR/GBP 1H Chart: Channel Up

Source: Dukascopy Bank SA
© Dukascopy Bank SA
The British Pound is weakening across the board, giving the Euro a good opportunity to outperform it. The main reason to be bullish the common currency, however, is the fact that the pair has recently established an ascending channel, and at the moment it is near the lower boundary of the pattern. In addition, the four-hour indicators are giving ‘buy' signals and the market is overcrowded with bears (65% of positions are short). Consequently, we expect the price to rebound from 0.76 and start a rally, which will likely extend up to 0.78 before there is a significant retracement. Meanwhile, if the rate dips beneath the trend-line at 0.76, the target will be the 200-hour SMA and daily S3 at 0.7530.
© Dukascopy Bank SA
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