The breakout to an 11-month high has been seen with increasingly bullish momentum, which paves the way for further gains. That doesn't mean it won’t mean revert first though.
Recently described as the world’s most boring currency by Matt Weller, the cross has finally broken out of a frustratingly choppy range. The daily structure has provided increasingly bullish legs to take it to an 11-month high and we see the potential for it to return to the 0.9300 highs in due course. Despite its frustrating range in recent months the weekly chart is in a bullish trend and recent momentum has now realigned with it.
Over the near-term however, we think the trend could be in for at least a pause and, if not, a deep correction. Yesterday’s high sits around the upper bound of a bullish channel, is extended beyond its upper Keltner band and RSI is overbought. Furthermore, currently amid its 6th bullish session and 5th bullish week, it finds itself in an area which has historically seen it return to the mean (more-often than not).
It’s also worth noting the relatively deep corrections this pair provides, even between recent legs higher. If this is characteristic is to be repeated, EUR/GBP could find itself below 0.90 and / or the 20-day average, before resuming its trend higher.
Keep an eye on the October and November 2017 highs as they may provide a level of support to position yourself for a better-timed entry for the next (anticipated) leg higher.