EURGBP seems to be correcting from the 11-year high of 0.9498, after a phenomenal two-day aggressive rally sent the pair to historic highs not seen since 2009. The move down past the 0.9148 support is currently encountering some hindrance from the upward sloping red Tenkan-sen line slightly lower.
The short-term oscillators reflect strengthening negative momentum for now. The MACD, in the positive region, although above its red trigger line, is weakening slightly, while the declining RSI has pushed out of the overbought territory. Furthermore, the falling stochastic lines have completed a bearish crossover, exiting the overbought section. That said, some caution is warranted as the 50- and 100-day simple moving averages (SMAs) and Ichimoku lines, retain their upward slopes.
Moving south, the next support could come from the 0.9033 level, which is the 38.2% Fibonacci retracement of the up leg from 0.8281 to 0.9498. Breaching this, the 0.8978 swing low could deter the price from testing the 50.0% Fibo of 0.8889, where the blue Kijun-sen line also lies. If the bears manage to sustain the dive down, the 61.8% Fibo of 0.8745, coupled with the 200-day SMA, may prove to be a tougher barrier to break.
If buyers manage to steer the price back above the 0.9148 level (previous support-now-resistance), the next obstacle comes at the 23.6% Fibo of 0.9210 ahead of the nearly 10-year inside swing high of 0.9324. Pushing above, the 0.9411 resistance from October 2009 could hinder the price revisiting the recent multi-year top of 0.9498, just shy of the 0.9517 peak. If the bulls overcome the fresh summit, the 0.9632 peak of January 2009 could draw traders’ focus.
The short-term remains cautiously bullish above the 0.9000 and 0.8978 marks. However, strong signals exist for a stretched correction to the downside.
