EUR/GBP has been trading in a consolidative manner since Friday, between the 0.8905 and 0.8990 levels. Overall, the pair has been in a sliding mode below a downside resistance line since March 19th, and although it stands above an upside line drawn from the low of February 18th, we believe there is ample room for more declines.
A break below Friday’s low of 0.8905 could bring the 0.8844 barrier into play, which almost coincides with the 200-EMA on the 4-hour chart. If that level is broken as well, then we could see the bears diving towards the 0.8740 area, which acted as a resistance between March 2nd and 4th. Another slide, below 0.8740, may extend the slide towards the low of March 5th, at around 0.8620, or the aforementioned upside line taken from the low of February 18th.
Looking at our short-term oscillators, we see that the RSI rebounded from near its 30 line, but turned down again, while the MACD, although flat, lies below both its zero and trigger lines. Both indicators detect downside speed and support the notion for some further declines in this exchange rate.
On the upside, we would like to see a break above 0.9275 before we start examining whether the bulls have gained the upper hand. The rate would already be above the downside line taken from the high of March 19th, while the break above 0.9275 would confirm a forthcoming higher high on the 4-hour chart. The bulls may sail north towards the high of March 23rd, at around 0.9385, the break of which may allow them to put the psychological 0.9500 hurdle on their radars. That barrier was last tested on March 19th.
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