EURGBP landed nicely near the 200-day simple moving average (SMA) last week, retracing 61.8% of the 0.8281- 0.9497 bullish rally.
The pair, however, continues to look bearish despite the stabilization as the RSI seems unable to rise above its 50 neutral mark, the MACD continues to decelerate towards the negative area, while from the Ichimoku indicators, the falling red Tenkan-sen line has already forcefully crossed below the blue Kijun-sen line.
A break below the 61.8% Fibonacci of 0.8745 could bring the bears back into play, shifting the spotlight to the 0.8650 restrictive area. Slightly lower, a decisive close below 0.8594, which is the neckline of a completed bullish double bottom pattern, could cause a bigger damage as such a move would make the recent rally unreliable and would confirm a neutral outlook in the medium-term picture.
Yet, traders should also be closely watching the rising 50-day SMA, which is pushing towards the 200-day SMA. A successful bullish cross between the lines could ease worries about an outlook downgrade in the medium-term picture.
On the upside, the 50% Fibonacci of 0.8889 could act as resistance if the price reverses up. In case it fails to hold, a tougher wall could pop up between the red Tenkan-sen currently at 0.8987 and the 0.9087 barrier, where the 38.2% Fibonacci also happens to be. Higher, the door would open for the 23.6% Fibonacci of 0.9210.
In brief, EURGBP is currently viewed as bearish and a close below 0.8745 would confirm the negative bias. In the medium-term, a drop below 0.8594 would put the market back into a neutral condition.
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