EUR/GBP Price Analysis: The tide turns in favor of bears, critical 0.8605 support eyed
|- EUR/GBP’s sell-off likely to extend amid rising channel breakdown on the 4H chart.
- A test of the critical support at 0.8605 remains on the cards.
- RSI points south, outlook appears bearish in the short term.
EUR/GBP is nursing losses around mid-0.8600s in Monday’s Asian trading, having felt the heat from steep losses in the EUR/USD pair, as the US dollar rebounds amid broad risk-aversion.
Meanwhile, the Cable remains on the defensive but resilient so far, in the wake of resurgent US dollar demand, as the UK re-opening and vaccine optimism remains supportive of the pound.
The focus this week remains on the US infrastructure spending bill and the European Central Bank (ECB) policy decision.
From a near-term technical perspective, the path of least resistance for EUR/GBP appears to the downside, especially after the cross confirmed a rising channel breakdown on the four-hour chart in the US last session.
After a brief downside consolidation in early dealing this Monday, the bears have resumed the declines, as the immediate support is now envisioned at 0.8605 – the horizontal (orange) trendline.
Further south, a confluence of the 100 and 200-simple moving averages (SMA) around 0.8590 could emerge as crucial support.
The Relative Strength Index (RSI) is edging towards the oversold territory, currently at 39.11, suggesting that there is more scope to the downside.
EUR/GBP four-hour chart
Alternatively, any recovery attempts could meet strong resistance at 0.8668, the intersection of the rising wedge support and upward-sloping 50-SMA.
The next barrier for the bulls is aligned at the bearish 21-SMA at 0.8806. Acceptance above the latter is critical to unleashing further recovery gains.
EUR/GBP additional 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.