EUR/GBP Bounces Off the 20 SMA, After a Bullish Chart Setup

EUR/GBP retreated lower yesterday, but has bounced off the 20 SMA today

Skerdian Meta•Tuesday, June 23, 2020•1 min read

EUR/GBP made a strong bullish move in late February/early March, climbing 12 cents higher, and then retreated 8 cents lower during most of march. In April and in the first week of May, this pair consolidated in a 200 pip range, but broke out of it by the middle of last month and since then buyers have been in control.

This forex pair moved above the big round 0.90 level in the last days of May, reaching 0.9050s, but pulled back down again. For a few weeks we saw another range-bound trading in EUR/GBP. But, the Euro has ben more bullish than the GBP, with Europe coming out of the lockdown.

So, the range was broken at the end of last week, which was another bullish signal. Yesterday though, we saw this pair pullback lower. But the decline was quite slow, which suggested that buyers were going to jump in again soon. They did so after the price formed a doji candlestick above the 20 SMA (grey) on the H4 chart, which is a bullish reversing signal.

The 20 SMA also provided solid support, so EUR/GBP bounced off the 20 SMA and is now 50 pips higher. We missed that opportunity yesterday to buy the pair at the 20 SMA, but will do so when another pullback takes place.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.