- EUR/GBP gains strong traction for the second straight session on Monday.
- Overbought conditions on hourly charts warrant caution caution for bulls.
- The set-up favours a move to 61.8% Fibo. level, around the 0.9280 level.
The EUR/GBP cross added to the previous session's strong momentum and shot to over three-month tops, around the 0.9135 region during the early European session on Monday.
Friday's sustained move beyond the 0.9075-80 region confirmed a bullish breakthrough a one-week-old trading range. A subsequent strength beyond the 0.9100 mark on Monday reaffirmed the breakout and was seen as a key trigger for bullish traders.
This comes on the back of last week's dip-buying near a previous strong resistance breakpoint, turned support, near the key 0.9000 psychological mark. This, in turn, supports prospects for a further near-term appreciating move for the cross.
The move-up remained well supported by bullish technical indicators on the daily chart. Meanwhile, oscillators on hourly charts are already flashing overbought conditions and warrant some caution before positioning for any further gains.
Hence, it will be prudent to wait for some near-term consolidation or a modest pullback to the 0.9100 round-figure mark, which might still be seen as a buying opportunity. Monday's key focus will remain on the resumption of the UK-EU post-Brexit talks.
The cross now seems poised to extend the momentum further towards testing the 61.8% Fibonacci level of the 0.9500-0.8671 downfall, around the 0.9180 region. On the flip side, weakness below the 0.9100 mark might trigger a corrective slide to the 0.9040-35 area.
EUR/GBP daily chart
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Technical levels to watch
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