Buyers stay in control
The EURGBP corrected today (see post from yesterday). Looking at the 5-minute chart, the pair fell below the 100 and 200 bar MAs earlier in the day. Sellers entered and the price corrected lower (see the break below the blue and green lines).
Where did the correction go?
The price went down to test the broken trend line on the 4-hour chart (at 0.9194 currently - see chart below). That was a key break level from yesterday. The market raced higher after that break.
So today is the retest day. True to the bullish form, the line was tested, it held, and we are now seeing a momentum move higher. The highs from yesterday at 0.92356 are in the trader's sites.
Recall from yesterday's post, you have to R-E-S-P-E-C-T the breaks in the EURGBP. As pointed out in that post, the pair broke above a key ceiling from 0.9144-54 on the monthly chart (see monthly chart below). That was the home to swing highs going back to 2009.
That area remains a key level for the bulls in addition to the level on the 4-hour chart.
What is the risk?
Going back to the 5 minute chart, the price is now back above the 100 and 200 bar MAs (at 0.9206 and 0.9216). Those two moving averages represent close risk levels for the pair now. Stay above keeps the bias firmly in the hands of the buyers. A move below does not turn the bias totally bearish, but it muddies the water and could lead to another test of the trend line on the 4-hour chart.
SUMMARY: The break above the trend line on the 4-hour chart, passed the correction test today. The price remains above the break point on the daily chart. So "respect the breaks" remains the theme for the EURGBP.
