A bullish breakout potentially coming
The euro has been trending lower against the pound all year but could that be about to change as it draws to a close?
The pair has recovered well over the last few weeks and while the top of the descending channel is arguably the level it needs to overcome to break that trend, a strong signal could come sooner.
The 200/233-day SMA band has been capping rallies in recent months and a move above here would technically put the pair back into bullish territory before the channel breakout has occurred.
It would also represent a break of the 61.8 fib level—September highs to November lows—which would suggest the recent rally is more than just a corrective move.
If the pair does manage to break above here, it could be an interesting support level should the pair initially pull back off the top of the channel as some profit-taking kicks in.
Of course, this is easier said than done, but we could soon see whether the euro is ready to put an end to a miserable 2021 against the pound.