Test of an accumulation breakout around 0.8800 looks imminent

  • November 10, 2022
  • A test of accumulation breakout around 0.8780 will infuse confidence in the Euro bulls.
  • Advancing 20-and 50-EMAs add to the upside filters.
  • The RSI (14) has shifted into the bullish range, which indicates more upside ahead.

The EURGBP pair is displaying back-and-forth moves in a narrow range below the critical hurdle of 0.8820 in the Tokyo session. The cross registered a perpendicular upside move on Wednesday after surpassing the critical hurdle of 0.8740. The asset is showing strength ahead of the UK Gross Domestic Product (GDP) data, which will release on Friday.

On a four-hour scale, the cross has delivered a breakout of the accumulation phase that indicates a transfer from inventories from retail investors to institutional participants. A confident breakout usually tests the breakout region before resuming a rally.

The 20-and 50-period Exponential Moving Averages (EMAs) at 0.8716 and 0.8753 respectively are advancing, which adds to the upside filters.

Also, the Relative Strength Index (RSI) (14) has shifted into a bullish range of 60.00-80.00, which indicates that the upside momentum is intact.

For a rally, the cross is expected to test the breakout region around October 21 high of 0.8781, which will drive the asset towards Wednesday’s high at 0.8829. A breach of the latter will send the cross toward October 12 high at 0.8867.

Alternatively, the Pound bulls could regain strength if the asset drops below Monday’s low at 0.8690. An occurrence of the same will drag the asset toward October 26 low at 0.8646, followed by October’s low at 0.8572.

EURGBP four-hour chart