EUR/GBP traded lower today, after hitting resistance at 0.8965 yesterday. Overall, the pair continues to trade below the tentative downside resistance line drawn from the high of Sept. 11, and thus, we would consider the near-term outlook to be negative.
A clear and decisive break below 0.8915, defined as a support by Wednesday’s low may pave the way towards the low of Nov. 11, at 0.8860, where another break would confirm a forthcoming lower low on the daily chart and may extend the slide towards the 0.8805 barrier, marked by the low of May 13.
Looking at our short-term oscillators, we see that the RSI turned down again, falling back below its 50 line, while the MACD, although fractionally above its trigger line, lies within its negative territory and shows signs of topping as well. Both indicators suggest that the rate may have started re-gathering downside speed, which supports the notion for further declines in the short run.
On the upside, we would like to see a strong rebound back above 0.9070, which is near the high of Nov. 5, before we start examining a bullish reversal. The rate would already be above the aforementioned downside line and thus, the bulls may get encouraged to push the action towards the 0.9105 zone, which provided resistance on Oct. 23 and 26. Another break, above 0.9105, could set the stage for the 0.9150 area, defined as a resistance by the high of Oct. 20.