EUR/GBP climbed higher on Monday, breaking above the 0.8472 zone, which provided resistance on October 28th, and acted as a decent support between October 7th and 13th. Today, the rate met resistance at 0.8513 and then it pulled back. Overall, the pair continues to print higher highs and higher lows above a short-term upside support line since October 26th, and thus, even if we see some further retreat, we will continue to see a positive short-term picture.
As we already noted, the retreat may continue for a while more, perhaps towards the 0.8472 barrier, from which the bulls may take charge again. This may result in a rebound and another test near the 0.8513 level, or near the peak of October 6th, at 0.8526. A break higher may pave the way towards the inside swing low of October 1st, at 0.8545, the break of which could carry extensions towards the peak of October 4th, at 0.8573.
Looking at our short-term oscillators, we see that the RSI turned down after hitting its 70 line, while the MACD, although above both its zero and trigger lines, shows signs that it could start topping as well. Both indicators suggest that the strong upside speed may start easing somewhat now, which comes inline with the view that some further retreat may be looming for now.
In order to abandon the bullish case and start examining whether the bears have gained full control, we would like to see a dip below 0.8462. This may signal the break below the aforementioned upside line and could pave the way towards the low of October 29th, the break of which may take the rate to the low of the day before, at around 0.8420. Slightly lower lies another, more important barrier, the 0.8402 zone, defined as a support by the low of October 26th.
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