Technical Analysis – EURGBP declines below 3-month high; lacks direction in long term

Melina Deltas, XM Investment Research Desk

EURGBP has advanced considerably over the preceding two days, hitting a new more-than three-month high of 0.9086. Today’s pullback shifted the technical indicators from upside direction to sideways movement. The RSI indicator is sloping down after reaching overbought zone, while the ROC oscillator is flattening in the positive area.

An upside run in the price may retest the previous peak of the one-year high of 0.9100. Above that, investors would be interested to see whether bullish dynamics can overcome the previous peak and meet the 0.9300 psychological hurdle.

Alternatively, a decline in the price may retest the 0.8995 support barrier, before heading even lower towards the 0.8930 level, where it topped on November 19. More downside pressure could send prices until the 20- and 40-simple moving averages (SMAs) in the daily chart, near 0.8890 and 0.8845 correspondingly.

To conclude, the short-term outlook is bullish, however, in the long-term picture the price lacks direction.