EURGBP Edges Sideways Around 9-Month Low

Technical analysis of Forex market

EURGBP is consolidating around lower levels not reached in nine months, capped by the 50-period simple moving average (SMA). The Ichimoku lines are reflecting the pause in negative momentum, while the downward sloping SMAs are defending the short-term bearish demeanour in the pair.

A glimpse at the short-term oscillators suggests that a pickup in negative sentiment could play out. The MACD, below zero, is slightly above its red trigger line but is looking set to dip back below it, while the RSI is sliding in bearish territory. The stochastic lines are hovering marginally above the 20 oversold mark giving unclear hints on price’s direction.

If sellers drive the pair down and under the nine-month floor of 0.8737, support could then transpire from the zone of lows from 0.8720 until 0.8707. Should the price continue to deteriorate below the SMAs and the cloud, the base of 0.8682-0.8670 could provide the next tipping point for the pair. In the event this foundation gives way, the bears could dip to examine the 0.8620 trough from March 2020.

However, if buyers re-emerge, initial upside limitations may develop from the red Tenkan-sen line at 0.8774 and the cloud’s lower boundary, somewhat in-line with the 50-period SMA and the blue Kijun-sen line at 0.8790. Ascending into the cloud, its upper surface and the 100-period SMA around 0.8828 could impede improvements towards the 0.8839 high. Clearing this border, the bulls may then jump to challenge the resistance barriers of 0.8870 and 0.8883 respectively, while keeping an eye on the 200-period SMA at 0.8909.

In conclusion, EURGBP is sustaining a bearish tone below the SMAs and the cloud. A shift above the 0.8839 high could breathe new confidence into the pair, while a dive underneath the 0.8737 bottom could exacerbate the negative bearing.