- EUR / GBP gained traction for the second session in a row and moved further away from 0.9000.
- The technical setup supports the prospects for a bullish breakout via a downtrend channel.
- Any significant drop below the 0.9070 support could be seen as a buying opportunity near the 100 DMA.
The crossing EUR/GBP it gained traction for the second straight session and rallied further from the key psychological 0.9000 level, or five-week lows touched on Wednesday. Positive momentum lifted the crossover towards the upper bound of a one-month downtrend channel.
Given that the EUR / GBP cross has shown some resistance below the 100-day SMA, a convincing advance will be seen as a new trigger for bull traders and will set the stage for further gains. The cross could accelerate the move back towards the recovery of the 0.9200 level.
Meanwhile, the oscillators on the daily chart have just started to move into the positive territory and support the prospects for a bullish advance in the trend channel. Therefore, a move after the recently touched daily highs around the 0.9255-60 region now looks like a clear possibility.
On the other hand, any significant drop below the 0.9070 region could continue to attract some falling buying near the 100-day SMA and remain capped. With that said, sustained weakness below the 0.9000 mark will negate any near-term bullish bias and pave the way for further weakness.
The bearish momentum could drag the EUR / GBP cross further towards the trend channel support, which is currently pegged at the 0.8950 zone. Some follow-up selling will set the stage for an extension of the recent pullback from around the 0.9300 level.
Credits: Forex Street