EURGBP has reversed back down again after finding resistance at a four-week high of 0.9032 last week. This top is just above the 50% retracement of the downleg from August’s 8-year high of 0.9306 to September’s 3-month low of 0.8745.
Momentum indicators are pointing to a neutral to negative bias in the short term with the RSI just below 50 and the stochastic oscillator deep in bearish territory. However, the stochastics have reached oversold area and the %K line is attempting a bullish cross with the %D line, suggesting an upside reversal is nearing.
Further losses should see the September low of 0.8745 acting as a major support as this is also where the 200-day moving average (MA) is currently converging. A drop below the 200-day MA would reinforce the bearish structure in the medium term and open the way towards the next key support level of 0.8580.
In the event of an upside reversal, the 38.2% Fibonacci retracement at 0.8960 could act as a barrier before being able to re-challenge the 50% Fibonacci retracement level around the 0.90 handle. A break above this level would shift the medium-term outlook to a more neutral one as it would take the pair above the 50-Day MA. Further gains would lead the way towards the 61.8% and 78.6% Fibonacci levels at 0.9090 and 0.9185 respectively.
However, for a resumption of the longer-term uptrend, which was halted in August, EURGBP would need to beat the 8-year high of 0.9306.
