- EUR / GBP witnessed a radical intraday shift from a month-old downtrend line.
- The setup favors bearish traders and supports the prospects for a further short-term depreciation move.
- Only a sustained move past the aforementioned trend line resistance will nullify the negative outlook.
The crossing EUR/GBP it extended its strong intraday retracement from the weekly highs and fell to new session lows, around the 0.9020 region in the last hour.
Intraday momentum wavered near resistance marked by a one-month downtrend line, and bears are now looking to extend momentum below the 100-day SMA. The aforementioned support coincides with the one-month lows hit on Tuesday, which if decisively broken will be seen as a new trigger for bearish traders.
Meanwhile, technical indicators on the daily chart have started to move into negative territory and support prospects for further weakness amid a strong rally in demand for the British pound. Some follow-up selling below the 0.9000 key psychological level will add credibility to the bearish outlook.
The EUR / GBP cross could then accelerate the decline to the intermediate support at 0.8965 before finally falling to the intermediate support at 0.8635 en route to the 0.8900 level.
On the other hand, immediate resistance is now pegged near the 0.9070 horizontal zone. A sustained move further has the potential to lift the EUR / GBP cross above 0.9100, to retest the resistance of the aforementioned trend line, currently around the 0.9130 region.
Some follow-up buying will negate any short-term bearish bias and help the EUR / GBP cross move higher, to regain the 0.9200 level for the first time since September 23.
Credits: Forex Street