Technical Analysis – EURGBP breaches new floor before rebounding
May 24, 2023 4:27 pm
EURGBP briefly spiked below the floor of what is appearing to be a new trading range for the pair before sharply recovering higher. The upper limit of this range seems to be forming around the 61.8% Fibonacci retracement of the December 2022-February 2023 uptrend. If it holds, it would validate the short-term sideways pattern bound by the ceiling of 0.8711 and a floor around 0.8667.
The momentum indicators support the picture of an improving near-term bias, as both the stochastics and RSI are heading higher, although they both have yet to reach their 50 neutral levels.
The road ahead is looking tricky for the bulls as the 20-day simple moving average (SMA), currently at 0.8724, is closing in on the price action. Meanwhile, the 200- and 50-day SMAs are on a path to intersect slightly higher at 0.8747 and 0.8769, respectively. Furthermore, for there to be a meaningful rebound, the bulls would ideally have to aim even higher for the 38.2% Fibonacci of 0.8813, which would take the price back inside the Ichimoku cloud.
But should the price reverse lower and break below the latest floor, the 78.6% Fibonacci could provide support at 0.8639, otherwise, there would be few obstacles until the December 2022 low of 0.8546.
To sum up, EURGBP has found itself trapped within a new lower trading range, just as it dropped out of another one. Despite some upside momentum, the neutral picture is unlikely to change in the short term, while the slightly bearish structure in the medium term remains intact for now.
EURGBP briefly spiked below the floor of what is appearing to be a new trading range for the pair before sharply recovering higher. The upper limit of this range seems to be forming around the 61.8% Fibonacci retracement of the December 2022-February 2023 uptrend. If it holds, it would validate the short-term sideways pattern bound by the ceiling of 0.8711 and a floor around 0.8667.
The momentum indicators support the picture of an improving near-term bias, as both the stochastics and RSI are heading higher, although they both have yet to reach their 50 neutral levels.
The road ahead is looking tricky for the bulls as the 20-day simple moving average (SMA), currently at 0.8724, is closing in on the price action. Meanwhile, the 200- and 50-day SMAs are on a path to intersect slightly higher at 0.8747 and 0.8769, respectively. Furthermore, for there to be a meaningful rebound, the bulls would ideally have to aim even higher for the 38.2% Fibonacci of 0.8813, which would take the price back inside the Ichimoku cloud.
But should the price reverse lower and break below the latest floor, the 78.6% Fibonacci could provide support at 0.8639, otherwise, there would be few obstacles until the December 2022 low of 0.8546.
To sum up, EURGBP has found itself trapped within a new lower trading range, just as it dropped out of another one. Despite some upside momentum, the neutral picture is unlikely to change in the short term, while the slightly bearish structure in the medium term remains intact for now.
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