EUR/GBP has been on a bearish mode for most of the week, tumbling beneath the 23.6% Fibonacci retracement level of the down leg from 0.9110 to 0.8470, around 0.8620. Also, the price is hovering below the 20- and 40-simple moving averages (SMAs), while it has been remaining in a narrow range of 0.8680 – 0.8470 since February 26.
Technically, the price could lose some ground in the short-term as the MACD is changing direction to the downside below the zero level, while the stochastics are warning over an oversold market, increasing bearish sentiment.
Another step lower may reach key support at the 22-month trough of 0.8470, reached on March 13. Should this prove a weak obstacle, the selling could pick up speed until the 0.8380 support, identified by the low on May 2017, breaking the narrow range to the downside.
Alternatively, in case of an upside move, immediate resistance could come from the 40-SMA around 0.8600 before touching the 20-SMA and the 23.6% Fibonacci of 0.8620. Higher, the focus could shift to the 0.8680 (upper band of the range), though a close above this barrier could open the way for a bullish correction until the 38.2% Fibonacci of 0.8715.
In the short-term picture, the pair is still neutral as long as it holds in a range and if there is a successful drop below it could endorse the longer-term negative view.
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