EUR/GBP: Head & Shoulders in the making? – Rabobank

Piotr Matys, Research Analyst at Rabobank, suggests that the price action on the daily EUR/GBP chart resembles the Head & Shoulders technical pattern.

Key Quotes

“The rally from the September low at 0.833 could be the right shoulder in the making with a peak around/modestly above the 76.4% Fibonacci retracement at 0.86326.

The key question is what could potentially trigger another leg lower, which would bring under pressure the neckline at 0.8355 before we can seriously consider the possibility of a much sharp pullback towards the 0.80 level.

Given that from a fundamental point of view sterling will remain relatively weak against the euro due to prevailing uncertainty about Brexit, a sustainable reversal in EUR/GBP is unlikely. That said, a correction in the short-term cannot be excluded.

Further gains beyond the August high at 0.87249 would annul H&S formation.”