- EUR/GBP stalled its attempted recovery move near the top end of a descending trend-channel.
- The subsequent fall to fresh multi-month lows has set the stage for a further near-term downfall.
- A sustained move beyond the trend-channel resistance is needed to negate the bearish outlook.
The EUR/GBP cross extended Friday’s rejection slide from the top boundary of a short-term descending channel and refreshed multi-month lows on the first day of a new trading week. The cross touched an intraday low level of 0.8723, albeit lacked any strong follow-through selling.
Meanwhile, technical indicators on 4-hourly/daily charts are holding deep into the bearish territory and support prospects for a further decline. Hence, a subsequent fall to the 0.8700 mark, en-route the trend-channel support around the 0.8675 region, now looks a distinct possibility.
A convincing breakthrough will be seen as a fresh trigger for bearish traders and set the stage for an extension of the recent/well-established downtrend witnessed over the past two months or so.
On the flip side, immediate resistance is pegged near the 0.8765-75 horizontal zone. The mentioned region coincides with the trend-channel resistance, which should now act as a key pivotal point for short-term traders. Hence, a sustained move beyond might trigger a short-covering rally.
The EUR/GBP cross might then surpass the 0.8800 mark aim towards testing its next major hurdle near the 0.8860-65 region, with some intermediate resistance near the 0.8825 zone. The momentum could further get extended and assist the cross to reclaim the 0.8900 round-figure mark.
EUR/GBP 4-hourly chart
Technical levels to watch
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