EURGBP – Strong Bullish Signal is Developing Following a Break Above Daily Cloud

Technical analysis of Forex market

The cross rose over 0.5% on Monday and hit 8-day high, on a biggest one-day rally in one month.

Sterling, as more risk-sensitive currency than the euro, reacted negatively on strong risk aversion that pushed global equities sharply lower.

Today’s rally completed reversal pattern on a daily chart, signaling an end of multi-day congestion, while surge above daily cloud (spanned between 0.8525 and 0.8559) suggest that bulls regained control, with close above daily cloud top to confirm and generate strong bullish signal.

Improving daily studies (north-heading 14-d momentum is about to break into positive territory and MA turned to bullish setup) support the action.

Fresh bullish acceleration has so far retraced over 61.8% of 0.8613/0.8500 bear-leg) and pressuring next Fibo barrier at 0.8587 (76.4%) violation of which would open way towards key resistance at 0.8613 Sep 7 high).

Broken cloud top reverted to significant support which should keep the downside protected.

Res: 0.8595; 0.8609; 0.8633; 0.8642
Sup: 0.8569; 0.8559; 0.8543; 0.8525