EUR/GBP traded higher today after it hit support at the crossroads of the 0.8495 level and the upside support line taken from the low of November 24th. However, the recovery remained limited near the 0.8535 barriers, which provided resistance on November 15th and 30th, and support between November 8th and 12th. Overall, as long as the aforementioned upside line remains intact, we would consider the short-term picture to be positive.
A break above 0.8535 would confirm a forthcoming higher high and may encourage the bulls to climb towards the peak of November 11th, at around 0.8572. If they are not willing to stop there, then a break higher could extend the trend towards the peak of November 5th, at around d0.8595.
Turning our gaze to our short-term oscillators, we see that the RSI rebounded from near its 50 lines and now points up, while the MACD, although below its trigger line, lies above zero and shows signs of bottoming. Both indicators suggest that the rate may have started picking up upside speed again, which increases the chances for further advances in the short run.
On the downside, we would like to see a dip below 0.8495 before we start examining a short-term bearish reversal. This will not only confirm the break below the pre-discussed upside line but also a forthcoming lower low on the 4-hour chart. The rate could then travel towards the 0.8445 barriers, marked by the low of November 29th, the break of which could aim for the 0.8430 zones, marked by the inside swing high of November 23rd. If that barrier doesn’t hold either, then its break could lead the rate towards 0.8407, marked by an intraday swing low formed on November 25th.
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