- EUR / GBP gains strong positive traction on Monday and breaks above the 0.9100 level.
- The bulls await some subsequent purchases above the 61.8% Fibonacci before opening new positions.
- Dips below the 0.9100 level could be seen as an opportunity to initiate new bullish positions.
The EUR / GBP cross has captured some aggressive buying on the first day of a new trading week, breaking past the 0.9075-85 resistance zone where the 50% Fibonacci retracement of the 0.9292 to 0.8861 dip lies. Strong momentum has pushed the cross to multi-week highs, around the 0.9135-40 region, where the 61.8% Fibonacci retracement is located.
Given the recent bounce from the horizontal support at 0.8865-60, a subsequent move above the mentioned barrier will set the stage for a further bullish move in the near term. The constructive outlook is reinforced by the bullish technical indicators on the daily chart, which are still far from being in overbought territory.
With that said, it would still be wise to wait for some solid continuation buying past 0.9150 before opening new bullish positions. The EUR / GBP cross could accelerate the upward movement and aim to regain the 0.9200 level. Momentum could extend further towards the September monthly highs around the 0.9290 region.
On the other hand, the 0.9100 level now seems to defend the immediate drop. This is closely followed by the 50% Fibonacci, around the 0.9085-75 region, which should now act as a solid support for the EUR / GBP cross. That being said, the lack of defense of the mentioned support levels could lead to some technical selling.
The corrective decline could then extend towards the 38.2% Fibonacci, around the 0.9030-25 region. Sustained weakness below that region will negate the short-term bullish bias and accelerate the slide towards the 0.9000 key psychological level on the way to the 0.8985-80 horizontal support and Fibonacci 23.6% around the 0.8965 region.
EUR / GBP daily chart
EUR / GBP technical levels
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