Photo - Andreas Zanin
Andreas Zanin
Analysis | August 24, 2021

KTM FX Weekly: Pause or stop?

The euro cross has surged two straight weeks for the 1st time since December 2020. And also, price action is trying to breach the 20MA weekly on a closing basis for the 1st time since early December 2020.

Technical traders are keeping a close eye between 0.8470-0.8450 levels on the EURGBP. The chart pattern suggests close below the given zone can take the cross down further to as much as 0.8300-0.8250. But here comes the savior-we name it 100MA Monthly.

Since July 2016, the 100MA has been the savior to the EURGBP, held three times in the past. This time, so far, the same moving average manages to hold the price not to fall further.

A breakdown and close below 100MA monthly would be a sign that the trend has reversed again. I would think that a large part of the fall has taken place since March 2020. The 100MA-monthly is around 0.8400 levels which should be good support. I don’t see the euro cross going to close below 0.8400 in the current month, even though the trend remains bearish.

Bull’s side would be concerned if EURGBP could not push this time and hold above 0.8730 over the next week or two. Investors may need to see how the price reacts when it approaches 0.8670-0.8730 levels.

Data wise, UK Consumer Prices Index rose by 2.0% in the 12 months to July 2021, down from 2.5% to June; every month.

In the other data point, UK Consumer Confidence Index decreased in August. According to the official release, the UK Consumer Confidence dropped to -8 in August. And retail sales fell 2.5% in July.

Data review:

Latest PMIs from EA and UK were mixed. According to the IHS market, August flash data pointed to another solid increase in business activity across Germany, with the PMI at 60.6 (Jul: 62.4). Besides, UK revealed a softer growth in business activity, with the PMI at a 6-month low (Aug: 55.3 v Jul: 59.2).

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts

Latest Article
Improve your trading with a True ECN Broker
Trading account overview