EUR/GBP traded lower yesterday, but the slide was stopped year the 0.8320 zone, also marked by the low of Mar. 28. Overall, the pair appears to be in a short-term downtrend since Mar. 31. Still, before we get confident about larger declines, we would like to see a decisive break below the key zone of 0.8310, which supported the pair on numerous occasions since the beginning of the year.
Such a break will confirm a forthcoming lower low on both the 4-hour and daily charts and may initially open the path towards the 0.8275 barrier, marked by the low of Mar. 3. The bears may take a break after hitting that zone, thereby allowing the rate to rebound somewhat.
However, as long as the rebound stays limited near the 0.8310 territory, we expect another round of selling and, eventually, a dip below 0.8275. This could carry larger bearish implications and set the stage for the 0.8220 barrier, marked by an intraday swing low formed on Mar. 7, or even the low of that same day, at around 0.8200.
Shifting attention to our short-term oscillators, we see that the RSI, already below 50, has turned down again, while the MACD lies slightly below both its zero and trigger lines, pointing down. Both indicators detect downside speed and support the notion of further declines in this exchange rate. Nonetheless, as we already noted, we prefer to wait for a decisive break below 0.8310.
We will abandon the bearish case and start examining a decent round of advances if we see a break above Monday’s peak of 0.8380. This will confirm a forthcoming higher high on the 4-hour chart and may also signal the completion of a failure swing bottom.
The bulls could then get encouraged to climb towards the 0.8410 level, marked by the low of Apr. 1, the break of which could aim for the 0.8440 zone, marked by the high of that day. If the bulls do not stop there either, bigger advances may be on the cards, perhaps towards the 0.8483 zone, defined as resistance by the high of Mar. 29.
