- EUR / GBP halts its recent recovery move from the one-year lows near the 0.8730 region.
- Mixed oscillators on hourly / daily charts warrant caution before opening directional positions.
- A sustained break below 0.8600 will negate the prospects for a significant recovery.
The EUR / GBP cross has gained positive traction for the second day in a row on Friday and has built on this week’s solid rebound from the one-year lows.
Momentum has led to the crossover above the 23.6% Fib retracement of the 0.9218-0.8539 dip, although it has stopped near the 0.8730 level. The mentioned region is approaching a break point of previous horizontal support, now turned into resistance, around the 0.8745-50 region, which should now act as a key point for short-term investors.
Meanwhile, technical indicators on the 1-hour charts have gained positive traction and support the prospects for additional intraday gains. That said, the oscillators on the daily chart, which have been recovering from bearish territory, have yet to confirm a positive bias and warrant some caution for the bulls.
This makes it prudent to wait for sustained strength above such support turned resistance before positioning for any further bullish movement. Some subsequent purchases will set the stage for a move towards the 0.8800 (38.2% Fibonacci) level on the way to 0.8850 and the 50% Fibonacci near the 0.8875-80 region.
On the other hand, any further pullbacks now seem to find decent support near the 0.8645-40 region. This is followed by the recent daily low support, near the 0.8600 level, which if decisively broken should pave the way for the resumption of the recent downward movement seen over the past two months or so.
EUR / GBP daily chart
EUR / GBP technical levels