EUR/GBP traded lower on Monday after hitting resistance at 0.8537. Since Friday, the pair has been trading below an upside support line drawn from the low of Oct. 26, while it started forming lower highs even before that. With that in mind, we will consider the short-term outlook to have turned cautiously pessimistic.
However, to get confident on further declines, we would like to see a dip below the inside swing high of Nov. 2, at 0.8513. This could encourage the bears to drive the battle towards the low of Nov. 3, at 0.8472, or the low of the day after, at 0.8462. If neither area can halt the slide, we could see the fall extending towards the low of Oct. 29, at 0.8433.
Turning our gaze to the short-term oscillators, we see that the RSI ticked up after hitting support near its 30 line, while the MACD remains below both its zero and trigger lines. Both indicators detect high downside speed, which supports the notion for further declines, but the fact that the RSI ticked up makes us cautious that a slight bounce may be looming, perhaps for the rate to test the 0.8537 barrier again.
Bullish Case
On the upside, we would like to see a move back above the 0.8595 barrier before we start examining whether the bulls have gained the upper hand again. This would confirm a forthcoming higher high on the daily chart and may encourage advances towards the peak of Oct. 1, at 0.8625, the break of which could allow extensions towards the peak of Sept. 29, at 0.8658.