- The EUR / GBP is witnessing some selling on Thursday and returns a part of the strong bullish movement of the previous day.
- The sustained breaking of a bullish descending wedge supports the prospects for additional short-term gains.
- The declines could still be seen as a buying opportunity and remain limited near the 0.8600 support zone.
The EUR / GBP cross has moved lower during the first half of trading action on Thursday and has extended the modest pullback the day before from the highs of more than a month. At the time of writing, the cross remains near the lower end of its daily range around the 0.8625-30 region.
Looking at the technical outlook, the positive continuation move from the previous day pushed the cross above the 200-period SMA on the 4-hour chart and the resistance of a short-term downtrend line. Momentum, however, stopped near the 23.6% Fib retracement of the 0.9218 drop to 0.8472.
The aforementioned trend line, along with another downward sloping line, has constituted the formation of a bullish descending wedge pattern. A sustained move above the pattern suggests that the EUR / GBP may have bottomed out and supports prospects for an extension of the recovery from lows of more than a year.
The constructive setup is reinforced by the fact that the technical indicators on the daily chart have started to move into bullish territory. That said, the slightly overbought RSI on the 1 hour chart has prevented the bulls from opening aggressive positions and limited the rise of the EUR / GBP cross.
However, the short-term bias remains in favor of the bulls. Therefore, any subsequent decline towards the break point of the descending wedge resistance, now turned into support, could still be seen as an opportunity to initiate new bullish positions and remain capped near the 0.8600 level.
On the other hand, the high of the previous day around the 0.8660-65 region (23.6% Fibonacci) should continue to act as an immediate hurdle. Some subsequent purchases will reaffirm the bullish outlook and push the EUR / GBP cross beyond the 0.8700 level, towards the 0.8730-40 area where the 38.2% Fibonacci is located.
EUR / GBP 4-hour chart
EUR / GBP technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
