Struggle near the 100-day SMA, around the 0.9030 region

• EUR / GBP extends Friday’s rejection drop from bearish channel resistance of over a month.
• The bears could now aim to test major support near the key psychological level 0.9000.
• A sustained force above the 0.9100 level will now be seen as a new trigger for the bulls.

The EUR / GBP cross witnessed a strong sell on Monday and extended the previous day’s rejection drop from resistance marked by the upper end of the bearish channel of more than a month.

The drop is due to a sharp rally in demand for the British pound, with the bears making another attempt to extend the move lower below the support of the 100-day SMA. The mentioned support is followed by the key psychological level 0.9000, which if decisively broken should pave the way for a further decline.

The EUR / GBP cross could then accelerate the decline to challenge the trend channel support, which is currently near the 0.8930-25 region. A convincing breakout will be seen as a new trigger for bearish traders and will set the stage for an extension of the recent pullback from near the 0.9300 level.

Meanwhile, the technical indicators on the daily chart, although they have been struggling to gain significant traction, are still far from confirming the short-term bearish outlook. Therefore, any subsequent decline could continue to attract some buying and remain limited amid lingering Brexit-related uncertainties.

On the other hand, the 0.9070 horizontal zone now appears to act as immediate resistance ahead of the trend channel resistance, around the 0.9100 round level. The bulls could wait for a sustained move past the aforementioned barrier before positioning for a move towards the intermediate resistance 0.9155-60 on the way to the round 0.9200 level.

EUR / GBP daily chart

EUR / GBP technical levels