The EURGBP last week created a new peak around 0.9098. However, as can be seen in the chart below, until the end of the week profits were given back, and the price was again supported by 0.8950.

I trade on this instrument at  broker XM, which has in its offer more than 300 other assets >>

As a result of the demand-supply struggles described above, an outside bar formation was created due to the fact that the range of moves from last week includes the price action from the previous week. It may turn out that a deeper correction of recent increases awaits us.

The channel on the daily chart

In turn, on the daily chart, the rate moves in a channel, where in the last Friday and yesterday its lower limit was tested. In addition, the horizontal area close to 0.8950 provides significant support here.

Therefore, if the declines after leaving outside bar formation are to materialize, the sellers must first overcome the confluence of support which is the lower channel constraint and the level of 0.8950. In the case of this scenario, the price may go to the next defense level at 0.8870.

Alternatively, keeping quotes within the channel will open the way for a second test of the last peak at 0.9098.

Leave us a comment!