EUR/GBP has been in a sliding mode since Tuesday, when it hit resistance near the 0.8855 zone. That said, the somewhat bigger picture suggests that the pair has been oscillating within a sideways range, between that barrier and the support of 0.8685 since April 1st. So, having that in mind, we would take a flat stance for now.
In order to start examining further declines, we would like to see the rate breaking through the lower end of the aforementioned range, at 0.8685. Such a move would confirm a forthcoming lower low and may initially aim for the low of March 5th, near 0.8625. If that level is also broken, we could then see the bears diving towards the low of February 28th, at 0.8520, the break of which may allow extensions towards the 0.8410 territory, defined as a support by the inside swing highs of February 20th and 24th.
Shifting attention to our short-term oscillators, we see that the RSI runs below 50 and points down, while the MACD, although fractionally positive, lies below its trigger line, pointing south as well. It could turn negative soon. Both indicators suggest that the rate may have started picking up negative momentum, which increases the chances for the rate to break the lower end of the range.
On the upside, we would like to see a strong rebound back above 0.8855, before we start assessing whether the bulls have stolen the bears’ swords. This would confirm a higher high and may open the path towards the high of March 30th, at around 0.8990, or the inside swing low of March 25th, at 0.9050. Another break, above 0.9050, may encourage the bulls to climb towards the 0.9225 zone, slightly below the peak of March 26th.
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