The British pound seems to be getting hammered after the release of the UK Nationwide Housing Price Index (HPI). The market was expecting a rise of 0.5% this time around. However, the outcome was softer than expected, as the UK HPI registered a reading of 0.1%. This is weighing on the British pound bulls, as the GBPUSD pair was seen trading lower and the EURGBP pair traded higher. The EURGBP pair approaching a critical resistance level, and if buyers manage to pierce the same, then more gains are likely in the pair.
Technically, there is a major bearish trend line connecting previous swing highs. The mentioned trend line is now coinciding with the 38.2% fib retracement level of the last down-move from the 0.8034 high to 0.7873 low. If the pair manages to clear the trend line and resistance level, settles above the same, then a run towards the 61.8% fib level is likely in the short term. It is even possible that the pair might trade back towards the previous high of 0.8034. However, we need the fundamentals in the Euro zone to align with the situation.
The RSI on the daily chart is getting closer to the 50 level, which is matching the trend line break area. So, if the daily RSI breaks up, then there are chances that the pair might follow as well. So, buying with a break looks like a good deal moving ahead.
Alternatively, if the pair fails to break the mentioned resistance level, then a move back towards the 0.7910-00 support area is possible, which might protect the downside in the pair.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Posted By IKOFX Technical Team: Online Forex Broker