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EUR/GBP technical analysis: downside may extend towards 0.8800

By Nathan Batchelor

20:07, 10 July 2020

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0.87821 USD
-0.00253 -0.290%

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EUR/GBP technical analysis

The euro has been under constant selling pressure against the British pound over recent days, as the bearish reversal from the 0.9175 level gathers pace.

EUR/GBP technical analysis shows that the bearish reversal could target the 0.8800 level at a minimum.

EUR/GBP medium-term price trend

The EUR/GBP pair has broken under the 0.9000 support level, as the British pound continues to gain ground against the euro.

EUR/GBP analysis shows that a significant bearish trendline breakout has taken place on the daily time frame.

EUR/GBP technical analysis

The rising trendline on the daily time frame is found by attaching the February monthly low to the May monthly low, and is located around the 0.9030 level.

Since the breach of the trendline, the downside in the EUR/GBP pair has started to accelerate.

Bears could target the 0.8800 level, and possibly the EUR/GBP pair’s 200-day moving average, around the 0.8700 level.

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12,000.90 Price
+1.500% 1D Chg, %
Long position overnight fee -0.0179%
Short position overnight fee 0.0070%
Overnight fee time 22:00 (UTC)
Spread 1.8


1,593.14 Price
-1.780% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 5.00


22,979.20 Price
-2.750% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 60.00


0.41 Price
-3.250% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 22:00 (UTC)
Spread 0.00360

EUR/GBP short-term price trend

EUR/GBP technical analysis shows that the pair has a bearish bias over the short term while the price trades below  the 0.9000 level.

The four-hour time frame currently shows that a head-and-shoulders pattern has recently formed, following the strong rejection from the 0.9175 level.

EUR/GBP technical analysis

Looking more closely at the bearish reversal pattern, the breakout area, or neckline, is located around the 0.9000 level.

According to the size of the head-and-shoulders pattern, the EUR/GBP pair could decline by around 175 points.

Traders are likely to use any moves back above the 0.9000 as a selling opportunity, in expectation of further downside.

EUR/GBP technical summary

EUR/GBP analysis suggests that a medium-term top is now in place. Losses below under the 0.9000 level should accelerate technical selling towards the 0.8800 level.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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