EUR/GBP fell below an uptrend line taken from the lows of April 17 lately, and also crossed below its 200-day simple moving average (SMA), touching a fresh three-month low earlier on Friday. The pair’s medium-term outlook hence appears to be turning increasingly negative, from neutral previously.
Short-term momentum oscillators support this notion. The RSI is already underneath its neutral 50 line and is pointing lower, detecting accelerating downside speed. Likewise, the MACD is within the negative territory and has recently dipped below its red trigger line as well.
Further declines in the pair could encounter preliminary support around the round number of 0.8800, marked by the lows of July 4. If sellers overcome that zone, the next obstacle may be the area around 0.8720, this being the trough of June 15, before the April 26 lows of 0.8680 comes into view.
On the upside, a potential reversal higher may meet initial resistance around 0.8855, defined by the inside swing low on October 1. If the bulls manage to pierce it, the 0.8935 level would come into scope – it capped several advances between July and September. Even higher, attention would turn to the September 21 peak, at 0.8995.
Overall, both the short- and medium-term pictures are looking bearish at the moment.
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