The Pound to Euro Changes Short-Term Trend

 

pound to euro 1

The Pound to Euro exchange rate is falling, mainly due to the Euro’s inverse relationship to risk and Brexit fears pressuring the Pound.

Looking at the chart below we can see that the pair has moved steadily lower since establishing highs at 1.20 in early December.

The pair then formed a bullish hammer candlestick at the 30 December lows and rebounded for a few days.

Hammers are bullish days which indicate the possibility of a reversal in the short-term trend however the bullish follow-through from this candle petered out reasonably quickly and the market starting going down again.

When the pair broke down below a key level on the chart (red line) at the lows of a hammer candlestick pattern, it reached a tipping point in which the short-term trend changed from bullish to bearish.

The move below its lows signals the final capitulation of any hope of more upside.

There is now less ambiguity in the short-term trend, which is likely to continue lower.

Next stop is the 1.1400 level, followed by 1.1300, with confirmation coming from a break below the current day’s lows at 1.1413.

GBPEURJan10

 

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