EURGBP is trying to balance its weekly negative charge near a familiar support zone of 0.8865 and at the bottom of its seven-month old range following the pullback below its exponential moving averages (EMAs).
Given former upside reversals in the region, which coincides with the 50% Fibonacci retracement of February’s rally, and the Stochastics’ bullish cross in the oversold area, a rebound in the price could be a likely scenario in the short run. Note that the market action has been developing around the lower Bollinger band over the past three days, increasing the case for an upside correction.
Should the bulls take over, the congested area of 0.8965 – 0.9033, tracked by the EMAs and the 38.2% Fibonacci, may block the way towards the 0.9080 resistance. Higher, the 0.9150 barrier could attract greater attention before all eyes turn to December’s high of 0.9228.
If the 0.8865 floor collapses, traders may seek support somewhere between the long-term barrier of 0.8800 and the 61.8% Fibonacci of 0.8745, while lower, the door would open for April’s trough of 0.8670.
Summarizing, EURGBP seems to be testing a potential pivot point around the key 0.8865 number. A break below it could face constraints within the 0.8745 – 0.8800 zone, while a bounce above it should overcome the 0.8965 – 0.9030 block to keep the bulls in play.
