EURGBP returned to neutrality after plunging below the 38.2% Fibonacci retracement level of the downleg from the 15-month high of 0.9110 to the 22-month low of 0.8415 on February 19; prices are consolidating within the 0.8715 resistance and the 0.8470 support. The technical indicators, however, are pointing to positive momentum in the near term.
The stochastics are heading upwards after the blue %K line crossed above the red %D line in the oversold zone, suggesting plenty of scope for additional upside moves. Moreover, a positive divergence seems to be occurring, as the MACD is improving above its trigger line at the same time prices are holding a downward pattern since early January. Despite these indications, the market action is still developing below the 20- and 40-day simple moving averages (SMAs).
If the price successfully surpasses the mid-level of the Bollinger Band (20-SMA), more gains could follow until the 23.6% Fibonacci mark of 0.8620, which stands near the 40-SMA. Even higher, the upper Bollinger Band currently at 0.8667 could act as major resistance for the bulls, while on top of that buying interest could increase until the 38.2% Fibonacci of 0.8715 and the 0.8725 resistance. A jump above these lines could switch bias from neutral to a more bullish one in the very short term.
Alternatively, further downside could drive the price south and towards the 22-month low of 0.8470. A failure to hold inside the Bollinger bands would shift the focus to the 0.8380 low reached on May 2017.
A drop below 0.8470, would turn the short and the medium-term outlook into bearish, while a climb above 0.8715 would bring the bullish view into play only in the short term.
