EURGBP has been trading in a consolidative manner recently, staying above the 0.8565 support level, marked by the low of September 6, but also below the lower boundary of the sideways range that contained most of the price action between October 3 and 27. This suggests a cautiously negative short-term outlook and the fact that the pair is trading below all three of the plotted exponential moving averages adds extra credence to that view.
The RSI ticked down after it hit resistance near 50, while the MACD is lying within its negative territory and appears ready to cross below its trigger line soon. Both indicators are pointing to negative momentum and are supporting the notion of renewed selling in EURGBP.
A clear dip below 0.8565 would confirm a lower low on the 4-hour chart and could initially aim for the psychological zone of 0.8500, which is slightly below the inside swing high of August 19. If there are no buyers to be found around there, a break lower could extend the fall towards the 0.8400 territory, which acted as a floor during the whole month of August.
The move signaling that the bulls have stolen all the bears’ swords may be a break above 0.8780, which is the upper boundary of the aforementioned range. In such a case, the pair could advance to the 0.8865 zone, marked by the highs of October 11 and 12, the break of which could set the stage for a rally towards the 0.8980 territory, defined as resistance by the high of September 29.
To wrap up, EURGBP has been trading in a quiet manner recently, staying below the lower bound of a prior sideways range. A break below 0.8565 would confirm a lower low and perhaps the bears’ supremacy.
