Technical Analysis – EURGBP flips backwards; focus on 0.8780
EURGBP erases last week’s bounce
Technical signals are mixed
Selling pressures might intensify below 0.8780
EURGBP switched to losses, falling back below its 20-day simple moving average (SMA) after an unsuccessful three-day battle around the more-than-six month high of 0.8764.
The pair is currently trying to stay afloat above the 0.8700 round-level as the 20-day SMA proved a tough obstacle earlier today at 0.8712. From a technical perspective, the risk is more to the downside than to the upside.
The price closed marginally below the key support trendline from August’s lows yesterday, while the momentum indicators have resumed their negative slope. Specifically, the RSI is set to cross below its 50 neutral mark and the stochastic oscillator is moving southwards again. Meanwhile, the MACD has slid below its red signal line too, indicating some pessimism among investors.
Yet, the golden cross marked between the 50- and 200-day SMAs is feeding some hopes that the positive trend from August’s lows could become more pronounced.
If the bears drive the pair below its 50- and 200-day SMAs at 0.8780, they may gain instant access to the 0.8610-0.8625 key area. This is where the upper band of the broken bearish channel from February’s highs is placed. Hence, another failure there could motivate a more aggressive selling towards the 0.8535-0.8565 constraining region.
On the upside, a break above the 20-day SMA and the 50% Fibonacci retracement of the January-September 2022 upleg at 0.8725 could lift the price up to the 0.8765-0.8780 caution zone. A victory there could generate strong buying interest, likely boosting the price towards the 38.2% Fibonacci of 0.8845.
All in all, EURGBP seems to be trading within neutral territory. A decisive rally above 0.8780 could brighten the short- and medium-term outlook, whilst a drop below 0.8680 might revive downside pressure.Related Assets
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