02.07.202110:46 Forex Analysis & Reviews: Technical analysis and recommendations for EUR/GBP on July 2, 2021

Today, we will consider one of the most interesting pairs of the euro/pound on the last day of the trading week. Moreover, the recent completion of the June trading allows us to analyze this instrument starting from the most senior timeframe.

Monthly

Before proceeding directly to the analysis of the charts, let me remind you that the price dynamics of this pair is mainly influenced by the new trade relations between the UK and the European Union after Brexit, as well as the degree of success of vaccination in both subjects against the COVID-19 pandemic. Of course, it is impossible not to consider the macroeconomic indicators coming from the eurozone and the UK.

So, the June trading ended with the strengthening of the British pound against the single European currency. This strengthening was very restrained. For five months now, the pair has been trading within the monthly cloud of the Ichimoku indicator, which is considered a zone of uncertainty. At the same time, it should be emphasized that the pair is trading around the middle of the monthly cloud, and it is still very far from leaving it on one of the sides. Let's consider both options for further development of events. The upward exit from the cloud and its upper border is also blocked by the 89-exponential moving average, colored black on the chart. In turn, if the bears on the instrument intend to bring the price down from the cloud, they will face the orange 200 exponential moving average, which can provide strong support to the quote.

Thus, it will be extremely difficult to get out of the Ichimoku EUR/GBP cloud. The euro/pound started trading in July with an increase. If it continues, the nearest target of the players for an increase in the exchange rate will be a strong resistance zone of sellers 0.8708-0.8718, where the maximum values of April and May of this year were shown. The nearest and also quite strong support zone is located in the area of 0.8530-0.8470. The minimum trading values of last month and April of this year are recorded here. At the moment, the current monthly trading range can be considered 0.8718-0.8530. I believe that the exit from this corridor can clarify the further direction of the quote. If we summarize the analysis of the oldest period, it is difficult to find clear signals about the further direction of the euro/pound, but the last June candle hints that the pair is likely to strengthen in July.

Weekly

We observe an even narrower trading range on the weekly EUR/GBP chart, which can be designated 0.8530-0.8670. As you can see, in recent weeks, a series of candles of the doji variety has appeared, which indicates the consolidation nature of trading. At the same time, the nearest resistance to growth attempts is provided by the red Tenkan line of the Ichimoku indicator. It is precisely at the end of the article that the euro bulls are trying to overcome. If the current weekly trading ends above Tenkan, there will be real prerequisites for growth to 0.8670 and a high probability of a breakdown of this resistance level. If the bears can seize the initiative in the time remaining before the end of the weekly trading, and the bulls lose their current growth, the pair will have downward prospects. At the moment, I will refrain from any specific trading recommendations. It is necessary to wait. You can see for yourself that the situation is far from clear and understandable.