EURGBP gains a foothold at 61.8% Fibo but downside risks remain
EURGBP’s latest decline traced the lower Bollinger band before digging up a positive pull from the 0.8300 handle, which is the 61.8% Fibonacci retracement of the bullish leg of the 0.8202 low. over 5½ years to 0.8457 high. The longer-term 100- and 200-period simple moving averages (SMA) continue to endorse the now neutral 1-month trend, while the drop in the 50-period SMA reflects the recent dominance of bearish forces.
Meanwhile, the short-term oscillators indicate that the bullish forces are strengthening. The MACD, well below the zero bar, flattens below its red trigger line, implying a decrease in negative momentum. The positively charged Stochastic Oscillator and improving RSI together indicate that the pair’s uptrend is intensifying.
In the upside scenario, buyers could face resistance near the 50.0% Fibo of 0.8329 before encountering a resistance zone ranging from the 100-period SMA at 0.8352 down to the 200-period SMA at 0.8352. 0.8365. Exceeding this fortified barrier, which also holds the middle Bollinger Band, the bulls could then tackle the upside constraints resulting from the 50-period SMA at 0.8383 and the nearby 23.6% Fibo of 0.8397. Nevertheless, the buying interest should persist to point the price north of the 0.8416 high.
If the uptrend starts to fade, initial support could transpire from the 61.8% Fibo at 0.8300 and the lower Bollinger Band at 0.8288. Assuming the negative trajectory resumes, price may struggle to dip beyond the support band between the 0.8271 low and the 76.4% Fibo of 0.8261. However, should the sellers break through these hurdles, traders’ attention may then turn to the 0.8220 low and the 68-month low of 0.8202. If the negative trends take over, the downside target could move towards the 0.8142 level, which is the 123.6% Fibo extension of the 0.8202-0.8457 bullish leg.
In summary, EURGBP exhibits a broader neutral to bearish bias below the SMAs and the 0.8457 and 0.8478 highs. A sharp dive below the 0.8300 barrier could kick-start the pair’s slide towards the lower end of the near-term neutral trading range. That said, price would need to push past the 0.8416 high to rekindle any compelling likelihood of a return to a bullish bias.