Technical Analysis – EURGBP rests near 38.2% Fibo; holds in ascending channel

Melina Deltas, XM Investment Research Desk

EURGBP has been in an ascending channel since April 30 but is currently testing the 20-day simple moving average (SMA) and the 38.2% Fibonacci retracement level of the up leg from 0.8275 to 0.9500 at 0.9035. The momentum indicators are suggesting a possible downside pullback as the RSI is meeting the 50 level and the stochastic is moving lower after a bearish cross within the %K and %D lines.

If sellers drive the pair below the 100-day SMA at 0.8940, the 50.0% Fibonacci of 0.8890 could interrupt the pair ahead of the 61.8% Fibonacci of 0.8750, switching the bias to neutral. In the event selling interest persists, the key support region of 0.8620 – 0.8675 could halt the decline.

To the upside, emanating pressure over the last couple of weeks has denied upside moves. If buyers manage to jump above the 0.9180 resistance, a revisit of the 23.6% Fibonacci of 0.9210 could unfold. Overcoming these levels could see resistance develop at the 0.9390 barrier, taken from the high on March 23.

In brief, EURGBP could trade positive in the short-term. A closure above the 23.6% Fibo 0.9210 could bring fresh buying pressure in the market, while a drop below the 61.8% Fibo of 0.8750 could raise selling interest.