EUR/GBP pares some losses after hitting a 21-month low.
EUR/GBP returned slightly to the upside after the strong downfall on the new 21-month low of 0.8530 on February 27, violating to the downside the sideways range it had been trading in since late 2017, with an upper bound at 0.9100 and a lower bound near 0.8615.
However, the red Tenkan-Sen and the blue Kijun-Sen lines are flattening in the short-term, signaling a possible neutral move, while the 20- and 40-simple moving averages (SMAs) are following the declining tendency. The MACD and the RSI are marginally gaining momentum in the negative territory following the fall in oversold levels.
Further advances in the pair could encounter immediate resistance near 0.8615, with an upside break opening the door for a test of the 23.6% Fibonacci retracement level of the down leg from 0.9110 to 0.8530, near 0.8667. If the bulls pierce above this zone too, that would drive the price until the 20-SMA currently at 0.8680 before testing the 0.8725 resistance.
On the other side, if the bears retake control and push the price below the 21-month low, they could initially challenge the 0.8380 level, identified by the bottom on May 2017. A clear break below that territory would reinforce again the negative outlook, paving the way for sellers to meet the December 2016 trough at 0.8300.
In brief, the picture looks significantly negative, with a break back above the 61.8% Fibonacci mark needed to change the outlook to neutral.
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