- EUR/GBP witnessed some selling on Thursday and eroded a part of the overnight strong move up.
- A sustained breakthrough a bullish falling wedge supports prospects for additional near-term gains.
- Dips might still be seen as a buying opportunity and remain limited near the 0.8600 support zone.
The EUR/GBP cross edged lower through the first half of the trading action on Thursday and extended the previous day’s modest pullback from over one month tops. The cross was last seen hovering near the lower end of its intraday range, around the 0.8625-20 region, down 0.15% for the day.
Looking at the technical picture, the previous day’s follow-through positive move pushed the cross beyond 200-period SMA on the 4-hour chart and a short-term descending trend-line resistance. The momentum, however, stalled near the 23.6% Fibonacci level of the 0.9218-0.8472 decline.
The mentioned trend-line, along with another downward sloping line constituted the formation of a bullish falling wedge pattern. A sustained move beyond suggests that the EUR/GBP cross might have bottomed out and support prospects for an extension of the recovery from over one-year lows.
The constructive set-up is reinforced by the fact that technical indicators on the daily chart have just started moving into the bullish territory. That said, slightly overbought RSI (14) on hourly charts held bulls from placing aggressive bets and capped the upside for the EUR/GBP cross.
Nevertheless, the near-term bias remains tilted in favour of bullish traders. Hence, any subsequent slide towards the falling wedge resistance breakpoint, now turned support might still be seen as an opportunity to initiate fresh bullish positions and remain limited near the 0.8600 mark.
On the flip side, the overnight swing high, around the 0.8660-65 region (23.6% Fibo.) should continue to act as an immediate hurdle. Some follow-through buying will reaffirm the bullish outlook and push the EUR/GBP cross beyond the 0.8700 mark, towards the 0.8730-40 area, closer to 38.2% Fibo. level.
EUR/GBP 4-hour chart
Technical levels to watch