Key Moments
- Societe Generale’s Kenneth Broux identifies a Head and Shoulders formation in EUR/GBP, signaling potential further weakness.
- A decisive move and sustained trading below 0.8610 is viewed as essential to validate a deeper bearish phase.
- Short-term resistance is highlighted at 0.8730/0.8740, with 0.8535 flagged as the next downside target within a broader descending channel.
Technical Setup for EUR/GBP
Societe Generale strategist Kenneth Broux notes that EUR/GBP has been tracing out a Head and Shoulders configuration, a pattern he associates with possible further downside for the cross if key technical levels fail to hold.
According to Broux, the market is currently focused on the neckline of this pattern. A clear and sustained break below this level is described as a critical signal for confirming that the bearish structure is taking hold.
| Level | Role |
|---|---|
| 0.8610 | Neckline and pivotal support; break and hold below seen as confirmation of extended downside |
| 0.8730/0.8740 | Recent pivot high; key short-term resistance zone |
| 0.8535 | Downside projection and lower boundary of a multi-month descending channel |
Key Levels in Focus
Broux emphasizes the importance of 0.8610 as the neckline of the Head and Shoulders pattern. He states, “EUR/GBP has evolved within a Head and Shoulders pattern, which points towards potential downside.”
He adds that “a break below the neckline at 0.8610 will be crucial for confirmation” and that “If EUR/GBP establishes below 0.8610, the downtrend may extend.” In the near term, he identifies the recent pivot area as an important cap for rallies, noting that “Recent pivot high around 0.8730/0.8740 remains a key resistance in the short-term.”
On the downside, Broux highlights a specific target within the existing trend channel: “The next objective could be located at projection of 0.8535, which is also the lower limit of a multi-month descending channel.”
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