Descending wedge breakout points to a test of the 200 SMA

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  • EUR / GBP’s four-day rally triggers the breaking of a descending wedge on the daily chart.
  • A move towards the 200 day SMA at 0.8767 cannot be ruled out in the medium term.
  • The RSI has turned lower, but remains comfortably above the midline.

The EUR / GBP cross has paused its four-day recovery move above 0.8600, consolidating Monday’s rally before the next push to the upside.

The cross broke the key moving averages on the daily chart on Monday, reaching the highest levels since June 10.

In doing so, the price closed the day above the downtrend line at 0.8602, marking the breakout of a falling wedge in the aforementioned time frame. The downtrend 100-day moving average coincides at that level.

The technical break points to a test of the 200 SMA at 0.8767. Before rising, the round level of 0.8700 could stop the bulls.

The 14-day RSI has turned lower, but remains well above the midline, keeping buyers hopeful.

EUR / GBP daily chart

On the other hand, the confluence of wedge resistance, now turned into support, and the 100 SMA could limit immediate declines.

The next relevant support awaits the bearish at the 50 SMA at 0.8590, below which the upside-sloping 21 SMA at 0.8571 could be tested.

EUR / GBP additional levels

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