EUR/GBP traded lower on Friday, after it hit resistance at 0.8500. However, today, it found support at 0.8472, and then, it rebounded somewhat. Overall, the pair continues to trade below the downside resistance line taken from the high of Sept. 29, but since Thursday, it’s been struggling to go for a lower low. Thus, we will adopt a cautiously bearish stance for now.
In order to start examining the resumption of the prevailing downtrend, we would like to see a break below 0.8472. This will confirm a forthcoming lower low on the 4-hour chart and could initially target the 0.8450 hurdle, marked by the lows of Aug. 10 and 11. If the bears are not willing to stop there, then we could see them pushing the battle all the way down to the inside swing high of Feb. 20, 2020, at around 0.8420.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from near 30, while the MACD, although negative, lies above its trigger line and points up. Both indicators detect slowing downside speed, suggesting that today’s rebound may continue for a while more. However, as long as EUR/GBP is trading below the aforementioned downside line, we cannot call for a bullish reversal.
In order to do so, we would like to see a break above that line, and then a move above the 0.8526 barrier, marked by the high of Oct. 6 and the inside swing low of Sept. 28. This could initially open the path towards the high of Oct. 5, at 0.8545, the break of which could see scope for larger bullish extensions, perhaps towards the high of the day before, at 0.8573.