EURGBP tests 0.85 lower border of trading range

Technical analysis of Forex market

EURGBP is in the vicinity of the base of the 3½-month sideways market after having surrendered its recent gains up to 0.8670. The 100- and the 200-day simple moving averages (SMAs) are weighing on the pair, keeping downside pressures alive, while the 50-day SMA is promoting a more neutral bias.

The Ichimoku lines are indicating that sturdy directional momentum is largely absent, while the short-term oscillators are exhibiting a slight tilt to the downside. The MACD is showing that momentum has dried up for some time now and is only just below its red trigger and zero lines. The RSI has shoved lower beneath its 50 level but has yet to signal negative pressures are strengthening, while the negatively charged stochastic oscillator is endorsing bearish price pressures.

In the negative scenario, immediate downside constraints could commence from the support foundation of the range of 0.8471-0.8503. In the event sellers break underneath this key border, the price may dive for the 0.8415 inside swing high obstacle. Should selling interest increase, the pair could then target the critical trough of 0.8338 from February 25 of last year. Sinking further, the 0.8276 barrier, identified in December 2019 could come into the spotlight.

Otherwise, if the price bounces off the 0.8503 upper frontier of the floor of the consolidation, buyers could face a durable resistance section from the 50-day SMA at 0.8574 until the Ichimoku cloud’s upper surface at 0.8625. If the bulls manage to float above the cloud, the price could then hit the 0.8670 high before challenging the ceiling of the range of 0.8711-0.8746, reinforced by the 200-day SMA.

Summarizing, EURGBP is sustaining a neutral-to-bearish demeanour in the short-term timeframe. A break either below 0.8471-0.8503 or above 0.8711-0.8746 could reveal a more convincing price direction in the pair.