Signs indicate EURGBP at inflection point

The EURGBP pair has been characteristically known to move in tandem, causing long periods of low volatility, thus resulting in extended range-bound movements. Since July 2016, the pair has been caught in a range trap between the two extreme levels of 0.8311 and 0.9307, spanning approximately 1,000 pips.

Over the past two weeks, EURGBP could be seen piercing the upper band of the range to retest its highs again. Multiple signs are pointing to the possibility that the pair is at an inflection point, waiting to rebound off the key resistance level.

The first sign is strength of the resistance level at 0.9307, of which the pair has encountered three times prior; every occurrence led to a rejection and subsequent reversal off to the low. This validates the level as a strong resistance, which means it is likely to persist with selling pressure. This can be observed again last week as shown by the candlestick with its wick extending past the critical level, but was swiftly depressed and closed lower.