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  • EUR/GBP’s recent 400 pip rally looks overdone as per the 14-day RSI. 
  • The overbought reading needs validation from the price chart. 

EUR/GBP jumped more than 1.6% on Thursday to 0.9270, the highest level since March 25. 

The pair has rallied by 400 pips in the past seven trading days, primarily due to renewed Brexit concerns. 

The sharp rally looks overdone, according to the 14-day relative strength index. The indicator has crossed into overbought territory above 70 for the first time since March. 

However, there are no signs of uptrend exhaustion on the price chart. Besides, indicators can stay overbought for a long time in a strong trending market. As such, the bias remains bullish. 

That said, a minor pullback to the former hurdle-turned-support at 0.9176 (June 29 high) may be seen before further gains. That’s because there are signs of bull fatigue on the hourly and 4-hour charts. 

Daily chart

Trend: Bullish

Technical levels