Two trades to watch: EUR/GBP, S&P500

EUR/GBP edges higher but downtrend remains in tact. S&P 500 run higher pauses for breath

Charts (2)

EUR/GBP rises but downtrend remains intact 

UK economy experienced record 9.9% GDP contraction in 2020 as a result of the shock from the pandemic.  

Q4 QoQ GDP rose 1% vs 16.1% in Q3 beating forecasts 0.5% 

Despite trade jitters in NI, strong vaccine rollout & BoE pushing back from negative rates supports GBP 

EUR/GBP technical analysis 

After the bearish breakout in January, the price has been consolidating over the past week amid muted trade. 

Even though the selloff has paused for breath the week, the bearish set up still remains.  

EUR/GBP trades below its 20 & 50 sma on the daily chart, the 20 sma crossed below the 50 sma another bearish signal and the RSI remains deep in bearish territory. 

Today’s slight bounce higher could encounter resistance at 0.8800 weekly high, ahead of 0.8830 the 20 sma. A move over 0.8865 could negate the current bearish trend, whilst a move over 0.8965 could see the bullish move gain traction. Although given the bearish RSI such a move is unlikely. 

On the flip side 0.8735 the weekly low offers support ahead of 0.8675 horizontal support from mid April. 

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S&P500 run higher pausing for breath 

Markets remain subdued amid holidays in Asia and as investors await stimulus news 

A move away from bond and into equities helped push Wall Street to record highs overnight 

US extending their vaccine programme 

Consumer confidence data due later 

S&P 500 technical analysis 

Whilst fundamentals point to further upside, a short term technical pullback could be on the cards potentially providing traders an opportunity for dip buying. 

Whilst the S&P500 trades above in an established bullish trend above its 20 & 50 dma, the RSI divergence suggests that the S&P500 could pull back in the near term. 

If the bears can break down round number support at 3900, then horizontal resistance turned support at 3860/50 20 dma  could come into play before 50 dma at 3775.   

On the upside a daily close above 3930 yesterday’s high would confirm the continuation of the uptrend and bring the key psychological 4000 level into target. 

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