EURGBP set to regain bid tone post a correction

The British pound was seen trading lower against a basket of currencies, as the UK CPI came as a disappointment. The EURGBP pair traded higher and broke an important resistance area. I think the recent break was critical which should encourage the buyers moving ahead. So, buying dips or with a break looks like a good deal in the short term.

There was a major resistance area around the 0.7900-10 levels for the EURGBP pair which was broken recently. It might act as a support moving ahead. So, if the corrects a lower from the current levels towards the broken resistance area, makes a stop and forms a bullish divergence, then we can enter into a buy trade. Alternatively, if the pair forms a flag pattern as shown in the chart above and breaks higher, then also we can jump into a buy position.

Initial target should be around the 0.7960 level, and final target could be around the 0.7980 levels. Stop should be placed below the 0.7870 level.

Reviewing recent events and trades
There was a holiday in the US and Canada yesterday. The Forex market was mostly quiet, but the US dollar was seen trading a touch lower Intraday. The downside accelerated during the Asian session earlier. The AUDUSD pair was one of the best performers, as the pair jumped above the 0.8800 level. The Euro also managed to gain bids against the US dollar. The market sentiment was totally in the favor of the US dollar sellers during the past couple of sessions.

Fundamental Outlook for the day
Today, there are a few important releases during the London session, which could lift the volatility in the market. However, there is hardly an economic release during the NY session today. So, all major pairs might be driven by the sentiment in the short term. There is an important economic release during the next Asian session i.e. the Chinese consumer price index data will be published. This particular event could impact the market sentiment in the short term. So, we need to keep a close eye on the release.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, GBPCHF, AUDCAD, USDCAD, USDJPY, CADJPY, AUDJPY and NZDUSD.
Get it HERE: Vladimir’s Markets Forecast

Trade carefully friends. Happy trading!