The EUR/GBP has decreased sharply in the last days and now is pressuring an important support level, the Cable bulls have taken the full control again and are driving pair down on the short term. The Pound rallies versus all its counterparts, has started a strong bullish momentum in yesterday’s trading session, the Cable has resumed the rally and could reach fresh new highs till the end of the day. On the other hand the Euro continues to drop against all its rivals, the Euro-zone economic figures have come worse and have punished the Euro. The Pound has edged higher in yesterday’s trading hours as the Unemployment Rate has remained the same at 5.1% for the fifth month in March, the rate has come in line with expectations, while the Average Earnings Index rose by 2.0% in March, exceeding the 1.7% estimate, has increased more than the 1.9% in February.
The Claimant Count Change has decreased unexpectedly lower and have lifted the Cable, the economic indicator has decreased from 14.7K to -2.4K, has decreased much compared to the 4.0K forecast. The EUR/GBP has decreased further today as the United Kingdom Retail Sales have increased by 1.3%, much more than the 0.6% prediction.
You can see that the price is pressuring the 38.2% retracement level, any drop below this level will open the door for more declines, this downward movement was expected as the price has found strong resistance at the 61.8% retracement level, has failed also to stay above the median line of the ascending pitchfork and now is heading toward the lower median line of the ascending pitchfork. The retreat was also expected because the price has failed to reach the upper median line of the ascending pitchfork, the sentiment could change drastically on the short term if the price will slip below the lower median line (LML) of the ascending pitchfork, most likely the rebound has ended when has hit the 61.8% retracement level and now the pair could resume the long term downward movement. If will look closer at the Daily chart, we can notice that we had a Head and Shoulders pattern, the price has broken down the neckline (short ascending dotted line) and now is targeting new lows. The price is expected to drop more than 350 pips after the head and shoulders pattern was confirmed, so the pair could drop aggressively toward the 23.6% retracement level, where he could find strong support, the rebound could resume only if the price will continue to trade inside of the ascending pitchfork’s body.
I’ve draw a descending pitchfork on the Daily chart to show you better the descending movement, the price has plunged below the minor median line and now is heading toward the lower median line, he needs to ignore the static support from 32.8% retracement level if he wants to reach the mentioned target.
You can notice on the H4 chart that the bearish momentum was paused by the 38.2% retracement level, the price is trading inside of a minor descending pitchfork, the perspective remains strongly bearish as long as the price is trading below the sliding line (descending dotted line), this line represents a major resistance on the short term.