- EUR/GBP drops to fresh five-week lows and rebounds.
- Bulls showed some resilience below the 0.8400 level.
The EUR/GBP cross dropped to fresh five-week lows on Friday, albeit showed some resilience below the 0.8400 round-figure mark and quickly recovered around 30-40 pips in the last hour.
The mentioned handle marks 61.8% Fibonacci of the 0.8276-0.8602 recent move up and coincides with a descending trend-line, which should now act as a key pivotal point for short-term traders.
The cross remains well below its important daily moving averages – 50, 100 and 200-day SMA and hence, some follow-through selling should pave the way for a further depreciating move.
Moreover, technical indicators on the daily chart have been drifting lower in the negative territory and reinforce prospects for the resumption of the prior/well-established bearish trend.
However, oscillators on the 4-hourly chart have been flashing oversold conditions, warranting some caution for aggressive traders and initiating any fresh bearish positions.
Having said that, a sustained break below the 0.8400 mark might turn the cross vulnerable to slide back towards challenging mid-December swing lows – around the 0.8276 region.
EUR/GBP daily chart
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