EURGBP shows flag-like continuation pattern on Monthly Chart
Flag or pennant-like chart patterns are trend continuation patterns. They consists of two key features: a ‘flagpole’ and a ‘flag’ or ‘pennant’. The flagpole represents the initial impulse and the flag represents a consolidation / retracement movement. Once the consolidation / retracement is over, price will erupt out of the flag and continue its previous movement. As we can see in this monthly chart of EURGBP, both features are prominent (see labels 1 and 2).
EURGBP prints continuation pattern on monthly chart
July price action outside resistance
We can see from price action since beginning of 2013 that the pair is trading around its resistance trendline (red). With the end of July nearly here, we can see the whole monthly candle outside resistance (point 3). In addition, support can be found around 0.84 which is a multiple-year support resistance level (point 4, 5, 6). A successful move outside resistance could signal the start of the continuation move.
Closing back below resistance trendline is a negative development.
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
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