- EUR/GBP is experiencing a short squeeze to the upside.
- The upside will likely be limited by the group of moving averages located in the 0.8450 area.
EUR/GBP has suddenly reversed and rallied on Thursday, gaining over 1.0% on the day so far. The explosive recovery suggests that a short squeeze is occurring and the short-term trend has reversed “in a flash.” The bulls are now back in control.
EUR/GBP Daily Chart
EUR/GBP will likely rise further. The next key resistance level lies in the group of moving averages in the 0.8450 area. From there, a temporary setback is likely given the speed of the climb. Any correction will likely find support around 0.8385, the July lows.
A warning of the sudden reversal came from the fact that the Relative Strength Index (RSI) was bullishly converging with the price (dashed red lines on the chart). This meant a lack of downward momentum and increased the chances of a pullback.
Another warning sign was that EUR/GBP has already reached the conservative target for the bearish move that started at the August 5 high at 0.8322. This raised the possibility that the entire move could have completely come to an end, which appears to be the case given today’s price action.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
