EUR/GBP Stays Above An Upside Support Line

EUR/GBP traded slightly lower yesterday, after it hit resistance at 0.8573. However, the retreat was stopped near the upside support line drawn from the low of Aug. 11. Therefore, as long as the rate remains above that line, we will consider the short-term picture to be somewhat positive.With that in mind, in order to get more confident on a trend continuation, we would like to see a break above 0.8573. This could allow a test near Monday’s high of 0.8593, the break of which would confirm a forthcoming higher high and perhaps pave the way towards the inside swing low of July 20, at 0.8619. If the bulls are not willing to stop there, then a break higher could encourage larger advances, probably towards the high of July 21, at 0.8658.

Taking a look at our short-term oscillators, we see that the RSI lies flat near its 50 line, while the MACD, although slightly positive, also runs flat, below its trigger line. Both indicators detect lack of directional momentum, and that’s why we prefer to wait for a move above 0.8573 before we start examining the bullish case again.

On the downside, we would like to see a dip below 0.8533 before we start examining a short-term bearish reversal. The rate would already be below the aforementioned upside line and may encourage the bears to shoot for the 0.8505 territory, marked by the lows of Aug. 18 and 19. Another break, below 0.8505, could extend the slide to the low of Aug. 16, at 0.8483, the break of which may open the way towards the 0.8452 territory, which provided support on Aug. 10 and 11.

EUR/GBP 4-hour chart technical analysis

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