- EUR/GBP reversed the weekly bearish gaps and climbed to session tops.
- The set-up, though positive, warrants some caution for bullish traders.
The EUR/GBP cross closed the weekly bearish gap and jumped to fresh session tops, albeit struggled to extend the momentum and failed ahead of the 0.8400 round-figure mark.
The mentioned handle marks a previous strong horizontal support breakpoint, now turned resistance, and coincides with 38.2% Fibonacci level of the 0.8598-0.8282 recent downfall.
A convincing break through might be seen as a key trigger for short-term bullish traders and has the potential to lift the cross further towards testing the 0.8460-65 confluence resistance.
The latter comprises of 50-day SMA and 1-1/2 month-old descending trend-line, which if cleared should pave the way for an extension of the ongoing recovery from over two-month lows.
Meanwhile, technical indicators have been gaining some traction on hourly charts but are yet to catch up with the recent positive move, warranting some caution before placing bullish bets.
On the flip side, the cross might continue to attract some buying near the 0.8350-40 region, which if broken might negate any positive bias and turn it vulnerable to retest sub-0.8300 levels.
EUR/GBP daily chart
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