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  • EUR/GBP added to the overnight gains and continued scaling higher for the second straight day.
  • The set-up favours bullish traders and supports prospects for a move towards the 0.9100 mark.
  • Sustained weakness below the 0.9000 psychological mark will negate the constructive outlook.

The EUR/GBP cross gained traction for the second consecutive session on Tuesday and shot to three-day tops, around mid-0.9000s during the early European session.

The latest leg of a sudden spike over the past hour or so was exclusively sponsored by the emergence of some fresh selling around the British pound. The momentum pushed the EUR/GBP cross beyond a confluence comprising of 200-hour SMA and the 38.2% Fibonacci level of the recent pullback from the 0.9215-20 double-top resistance.

Meanwhile, technical indicators on hourly charts have been gaining positive traction and have just started moving into the bullish territory on the daily chart. The set-up favours bullish traders and supports prospects for an extension of the ongoing recovery move from one-month lows, around the 0.8930 region touched last Thursday.

Hence, a subsequent strength beyond the 50% Fibo. level, around the 0.9070 region, en-route the 0.9100 round-figure mark, now looks a distinct possibility. The latter coincides with the 61.8% Fibo. level, which if cleared decisively will be seen as a fresh trigger for bulls and set the stage for additional gains for the EUR/GBP cross.

On the flip side, any meaningful pullback below 200-hour SMA, currently around the 0.9035 region, might find decent support near the 0.9015 region. This is closely followed by the 0.9000 psychological mark. Failure to defend the mentioned support levels will negate the positive outlook and turn the EUR/GBP cross vulnerable to retest the 0.8940-30 area.

EUR/GBP 1-hourly chart

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Technical levels to watch