EUR/GBP Price Analysis: Plummets to fresh multi-month lows, around 0.8620 region
|- EUR/GBP dropped to fresh multi-month lows and challenged descending trend-channel support.
- Extremely oversold conditions on the daily chart warrants caution for aggressive bearish traders.
- A sustained move beyond mid-0.8600s is needed to support prospects for any meaningful bounce.
The EUR/GBP cross edged lower through the first half of the European session and dropped to the lowest level since March 2020, around the 0.8620 region in the last hour. The mentioned area marks the lower boundary of over one-month-old descending trend-channel, which should act as a key pivotal point for short-term traders.
Meanwhile, technical indicators on the daily chart are already flashing extremely oversold conditions and warrant some caution before placing fresh bearish bets. This, in turn, supports prospects for some near-term short-covering move. That said, it will still be prudent to wait for some follow-through buying beyond mid-0.8600s before positioning for any meaningful recovery.
The EUR/GBP cross might then aim back to reclaim the 0.8700 round-figure mark. Any further positive move is more likely to remain capped near the trend-channel resistance, currently near the 0.8715 region. Only a convincing breakthrough will negate the bearish outlook and pave the way for a further near-term appreciating move towards the 0.8790-0.8800 supply zone.
On the flip side, bearish traders are likely to wait for sustained weakness below the trend-channel support, currently near the 0.8625 region, before placing fresh bets. This would set the stage for a slide towards March 2020 swing lows, around the 0.8595 region en-route the 0.8535 zone and the next major support near the key 0.8500 psychological mark.
EUR/GBP 4-hourly chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.