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 October 26th, while it started forming lower highs even before that. With that in mind, we will consider the short-term outlook to have turned cautiously negative.
However, in order to get confident on further declines, we would like to see a dip below the inside swing high of November 2nd, at 0.8513. This could encourage the bears to drive the battle towards the low of November 3rd, at 0.8472, or the low of the day after, at 0.8462. If neither area is able to halt the slide, then we could see the fall extending towards the low of October 29th, 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 strong downside speed, which supports the notion for further declines, but the fact that the RSI ticked up makes us cautious that a small bounce may be looming, perhaps for the rate to test the 0.8537 barrier again.
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 October 1st, at 0.8625, the break of which could allow extensions towards the peak of September 29th, at 0.8658.
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