EUR/GBP traded higher during the European morning Thursday, after it hit support near the 0.8735 barrier during the Asian trading. The rate is trading above the prior short-term downtrend line drawn from the peak of the 7th of March, and also above a new tentative upside support line drawn from the low of the 22nd of the month. What’s more, the latest recovery started after the pair hit support near the lower bound of the longer-term downside channel that’s been containing the price action since late September. So, having all these in mind, we believe that there is room for this pair to continue trading north for a while more.
Currently, the rate is testing the 0.8770 resistance level and if the bulls prove strong enough to overcome it, then we may see extensions towards our next resistance of 0.8800. Another break above that obstacle would confirm a forthcoming higher high and is possible to open the way towards the 0.8825 area.
Shifting attention to our short-term oscillators, we see that the RSI turned up and crossed back above its 50 line, while the MACD lies fractionally above both its zero and trigger lines. It could move further into the positive territory.
On the downside, a break below the new upside support line would make us abandon the bullish case and is possible to initially aim for the 0.8735 support. Another dip below that level could extend the slide towards our next hurdle of 0.8715.
