- EUR / GBP hit a weekly high at 0.8594.
- The pair broke the 100 DMA on Monday, suggesting that buyers are in control.
- As the spot price remains below the 200 DMA, downward pressure remains at play.
The EUR/GBP it is advancing for the third day in a row, trading at 0.8593, up 0.08% at the time of writing. Market sentiment is upbeat after Monday’s selloff due to Evergrande’s woes and its chances of defaulting on interest payments on Thursday.
Daily EUR / GBP chart
The pair bounced off the 100-day moving average (DMA) at 0.8571, approaching the weekly high printed on Monday near 0.8600. A daily break above 0.8600 will open the door for more gains. The first resistance level would be a downtrend line, around the 0.8630-50 range. Once that level is cleared, the next bidding zone would be the confluence of the July 20 high and the 200 DMA within the 0.8660-68 range, followed by the April 26 high at 0.8720.
On the other hand, with a failure at 0.8600 the EUR / GBP could fall towards the 100 DMA. A breakout of that level would expose the 50 DMA at 0.8545 followed by the September 16 low of 0.8500. A decisive break out of that level could push the price towards the 2021 lows at 0.8450.
The Relative Strength Index is around 58, supporting the bullish bias, but downward pressure could be at play as long as the 200 DMA remains above price. Caution is warranted.
TECHNICAL LEVELS
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