- EUR/GBP gained strong follow-through traction for the fourth straight session on Friday.
- The strong momentum validates this week’s bullish breakout through the 0.8600 mark.
- Slightly overbought RSI (14) on hourly charts warrants caution for intraday bullish traders.
The EUR/GBP cross built on this week’s solid rebound from over one-year lows and continued scaling higher for the fourth consecutive session on Friday. The momentum pushed the cross to fresh six-week tops during the early European session, with bulls now eyeing a move beyond the 0.8700 mark.
Looking at the technical picture, the positive momentum validated this week’s bullish breakout through the 0.8600 confluence barrier. The mentioned handle comprised of 200-period SMA on the 4-hour chart and a descending trend-line, which constituted the formation of a bullish falling wedge.
A subsequent move and acceptance above the 23.6% Fibonacci level of the 0.9218-0.8472 decline have set for a further near-term appreciating move. The constructive set-up is reinforced by the fact that technical indicators have been scaling higher in the bullish territory on the daily chart.
That said, RSI (14) on hourly charts is already flashing overbought conditions and warrants some caution for intraday bullish traders. Hence, any further move up is likely to pause near the 0.8730-40 supply zone, which nears the 38.2% Fibo. level and might cap the upside, at least for now.
On the flip side, the 0.8665 horizontal resistance breakpoint now seems to act as immediate support and is closely followed by the 23.6% Fibo. level, around the 0.8645-40 region. Any further might be seen as a buying opportunity and remain limited near the 0.8600 resistance-turned-support.
EUR/GBP 4-hour chart
Technical levels to watch