- EUR/GBP edged higher for the third consecutive session on Thursday.
- The technical set-up remains tilted firmly in favour of bullish traders.
- Move beyond the 0.8660 region will reaffirm the constructive outlook.
The EUR/GBP cross gained positive traction for the third consecutive session on Thursday and climbed to three-day tops, around the 0.8655 region during the early European session.
Looking at the technical picture, the EUR/GBP cross showed some resilience below the 0.8600 mark on Monday and stalled its recent pullback from near two-month tops. The mentioned handle marked a confluence region comprising of 200-period SMA on the 4-hour chart and the 50% Fibonacci level of the 0.8472-0.8719 move up. This should now act as a key pivotal point for short-term traders.
Meanwhile, technical indicators on the daily chart maintained their bullish bias and have been gaining positive traction on hourly charts. This, in turn, supports prospects for an extension of the recent strong bounce from over one-year lows touched earlier this April. A subsequent move beyond the 23.6% Fibo. level will reaffirm the constructive outlook and prompt some technical buying.
The EUR/GBP cross might then accelerate the momentum back towards the 0.8700 mark. This is closely followed by resistance near the 0.8715-20 region and the 0.8740-50 supply zone. Some follow-through buying will set the stage for a further near-term appreciating move and allow bulls to aim back to reclaim the 0.8800 mark for the first time since early February.
On the flip side, the 38.2% Fibo. level, around the 0.8625 area now seems to protect the immediate downside ahead of the 0.8600 confluence support. A convincing break below will negate any near-term positive bias and turn the EUR/GBP cross vulnerable to test the 61.8% Fibo. level support near the 0.8565 region before eventually sliding to challenge the key 0.8500 psychological mark.
EUR/GBP 4-hour chart
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Technical levels to watch
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