The EURGBP pair is still trending lower on the foreign exchange market, making it an attractive and stable trade for traders looking to navigate the volatile trading environment during the Ukraine crisis.
Find foreign exchange trades that are steady are in shortly supply at the moment, as the Ukraine/Russia news is causing some wild swings to take pair with traditional US dollar-based pairs.
With the Bank of England embarking on a back-to-back series of rate hikes the EURGBP bear trade has been picking up steam, however, the charts are still alluding to more losses.
Going forward, selling rallies back towards the 0.8400 resistance zone in expectations of 0.8200 looks a strong bet, especially with sentiment towards the EURGBP pair amongst the retail crowd turning very bullish.
At present, traders have their highest level of bullishness towards the pair in the course of nearly one-year. This hints of a further long squeezes for retail, especially at these levels of overly one-sided sentiment.
The ActivTrader platform shows that bullish sentiment is at extreme levels, with some 90 percent of traders still expecting more upside in the EURGBP pair.
With the technicals pointing to more losses, and sentiment at euphoric and irrational levels of bullishness, I am personally expecting more downside in the EURGBP to come.
EURGBP Short-term Technical Analysis
The four-hour time frame shows that the EURGBP pair is technically bearish over the short-term with the price trading well below the head of a large head and shoulders pattern, around 0.8480.
Lower time frame analysis currently shows the EURGBP pair could drop towards the 0.8150, according to the size of the head and shoulders pattern. These patterns are typically bearish, so little hope does exist for the EURGBP pair.
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EURGBP Medium-term Technical Analysis
The daily time frame shows that the EURGBP pair is trading inside a large descending broadening wedge pattern, with the bottom of the pattern located around the 0.8200 level.
I suspect the next few weeks will be crucial for the EURGBP pair in deciding whether we see the bottom of the pattern tested, or we see the top of the mentioned pattern tested.
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