Technical Analysis – EURGBP breaks sideways pattern, but can it break out?

Marios Hadjikyriacos, XM Investment Research Desk

EURGBP spent more than a month trapped in a narrow range with a lower boundary at 0.8680 and an upper end at 0.8860, before breaching it to the upside. Yet, the upside move seems to have encountered powerful resistance near the 0.9000 handle and the pair has turned lower again, igniting doubts about whether this is a real breakout.

Indeed, short-term oscillators reflect fading upside momentum, with the RSI pointing down within positive territory and the MACD looking ready to move below its red trigger line.

To confirm that the picture has indeed turned positive, the bulls would need a clear close above 0.9000. If that happens, the next target may be the 0.9150 zone, ahead of a more congested area around 0.9320.

Otherwise, if the latest pullback continues, the first battleground to offer support may be the intersection of the 0.8860 level and the 50-day simple moving average (SMA). If penetrated, that would bring us back within the range, turning the bias back to a more neutral one and shifting the focus to the lower end of the range at 0.8680, where the 200-day SMA is roughly located too.

Summarizing, the break above 0.8860 was encouraging, but it may have been a false signal. A confirmation move above 0.9000 is needed to solidify that the picture is truly improving.