After a 0.5% rise in December, UK consumer prices decreased by 0.1% in January. However, the year-on-year rate increased to a new 29-year high of 5.5 percent from 5.4 percent. Still, it was slightly above expectations as prices fell in January 2021. The inflation in the eurozone is expected to hit 4.8% on spiking energy prices. Rising prices and new data coming from major economies every month make forex trading even more exciting.
The current formation of the EURGBP currency pair suggests the construction of a large downtrend that moves within the green channel. We see that in the first half of December, the market reached the upper green wall, after which the price turned around and began to move in a downward direction.
In early February, the price touched the lower green line, but the bears failed to break through it, the price pushed off and continued its upward movement. The last ascending section of the chart describes a yellow channel.
Currently, the market is located near the lower yellow line. There is a chance that the bears will be able to break through the support level of 0.836. If this level is broken, market participants may expect a second decline to the lower green wall and the support level of 0.826.
If the lower yellow line is not broken, the price will push off from it and start moving upward. We see that there are no obstacles on the way for the bulls to the upper green line, so there is a high probability that the bullish trend will continue to the resistance level of 0.852.
If the downward movement is confirmed, we can consider opening short positions. If the market moves toward the upper green line, it is worth considering opening deals for purchases.