Technical Analysis – EURGBP plummets below key support; bias worsens

EURGBP sellers came in with force during early European trading hours on Tuesday, squeezing the price beneath the protective 20-day simple moving average (SMA) and towards an intra-day low of 0.8566.

The quick bearish correction also pierced the 38.2% Fibonacci retracement of the long-term 0.9228 – 0.8201 downleg at 0.8594, which has been limiting both upside and downside pressures over the past two months, and breached the steeper ascending trendline.

If the bears secure a close below the 20-day SMA, the decline could initially test the 50-day SMA at 0.8525 ahead of the 0.8500-0.8483 support zone. Sliding lower, the pair may head directly towards the flattening 200-day SMA and the 23.6% Fibonacci of 0.8444. Another failure at this point could spur further selling towards the 0.8378 handle.

Although the RSI and the MACD are painting a blurry picture for short-term trading, with the former inching below its 50 neutral mark and the latter deviating below its red signal line, an upside reversal above the 38.2% Fibonacci of 0.8594 could see the pair re-challenging the 0.8679 bar once again. If efforts prove successful this time, the price could advance towards the 50% Fibonacci of 0.8715, a break of which could clear the way towards the tough resistance line currently seen around 0.8770.

In conclusion, EURGBP technical signals seem to be leaning on the downside, as the price is aiming for a close below the 0.8583 support region. The 50-day SMA at 0.8525 will be the next target if sellers keep the market below that threshold today.  

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