EURGBP Set To Give Up Some Ground After Sharp Rebound

Technical analysis of Forex market

EURGBP is retracing the sharp increase that followed the positive large-gap open earlier today after failing to extend gains beyond 0.9200.

The price has significantly stretched above the upper Bollinger band and the RSI is set to exit the overbought zone. Hence, some weakness could be possible in the short run, and with no key support insight, the nearest obstacle to curb downside movements could be the 0.9135 – 0.9150 area, which encapsulates the 61.8% Fibonacci level of the 0.9228 – 0.8980 downfall. Beneath that, the pair may test the 50% Fibonacci of 0.9100 before heading for the 38.2% Fibonacci of 0.9076 and the 50-period exponential moving average (EMA).

Alternatively, a strong rebound above 0.9200 could challenge September’s resistance region of 0.9260 – 0.9290, a break of which would turn the spotlight towards the 0.9330 barrier from March.

In terms of trend, the pair maintains a positive structure, which developed above the double bottom formation around 0.8865, and only a significant drop below 0.9000 would change the bullish outlook back to neutral.

In brief, EURGBP is looking vulnerable to downside corrections, shifting attention towards the 0.9150 – 0.9135 area.