EUR/GBP Bullish Reversal at 61.8% Fibonacci Support Zone

The EUR/GBP has made a key bullish bounce at the 61.8% Fibonacci retracement. This occurred after price action made a breakout above the key resistance trend line (dotted red).

This article will examine whether a long-term bullish reversal can indeed take place on the daily chart.

Price Charts and Technical Analysis

The EUR/GBP daily chart is showing wicks on the bottom of the daily candle. Price action is now testing the 21 ema resistance zone:

1. A push above the 21 ema zone could indicate a bullish breakout (green arrow).
2. The first target is the -27.2% Fibonacci level at 0.8658.
3. A bull flag or pullback after hitting the first target could see price action move up again towards the second target at the -61.8% Fibonacci level at 0.8715.
4. A break (blue arrow) above the resistance zone (red box) could indicate a larger bullish reversal via a wave 3 (purple) pattern.
5. A bearish bounce (orange arrow) leaves the window open for an ABC (grey) pattern.

On the 4 hour chart, the EUR/GBP is showing a bullish breakout above the resistance trend lines (red dotted):

1. Price action seems to have completed a 5 wave pattern (pink) in wave 1 (purple).
2. A bearish ABC (pink) could have completed wave 2 (pink).
3. A bearish breakout (red arrows), however, below the support trend line (green) could indicate a deeper wave 2 at the 78.6% Fibonacci level.
4. A break below the bottom invalidates (red circle) the wave 1-2 (purple) pattern.
5. A bullish continuation (green arrow) above the current candle indicates an immediate push higher. A small pullback (orange arrow) also could see a push up (green arrow).
6. A bull flag pattern (grey arrow) could kick start a larger bullish breakout (blue arrow).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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