EUR/GBP Price Analysis: Seems poised to test 0.8730-40 supply zone
- EUR/GBP attracted some dip-buying and turned positive for the second straight session.
- The technical set-up favours bullish traders and supports prospects for additional gains.
- Any meaningful pullback might still be seen as an opportunity to place fresh bullish bets.
The EUR/GBP cross reversed an intraday dip to the 0.8670-65 area and turned positive for the second consecutive session on Wednesday. The cross was last seen hovering near the top end of its daily trading range, with bulls making a fresh attempt to build on the momentum beyond the 0.8700 mark.
Looking at the technical picture, the EUR/GBP cross attracted some dip-buying near the 23.6% Fibonacci level of the 0.9218-0.8472 decline. This comes on the back of a bullish breakout through a falling wedge pattern and supports prospects for an extension of the recovery from one-year lows.
The constructive set-up is reinforced by the fact that technical indicators have been gaining positive traction on the daily chart and eased from the overbought zone on hourly charts. Hence, a subsequent move beyond the overnight swing highs, around the 0.8710 region, looks a distinct possibility.
From current levels, the next relevant hurdle is pegged near the 38.2% Fibo. level, around the 0.8740-50 supply zone. Some follow-through buying should allow the EUR/GBP cross to prolong its bullish trajectory and aim back to reclaim the 0.8800 mark for the first time since early February.
On the flip side, the 0.8670-60 region now seems to have emerged as immediate support ahead of the 23.6% Fibo. level, around the 0.8645-40 zone. Any further pullback might still be seen as a buying opportunity and remain limited near the 0.8600 mark, or the falling wedge resistance breakpoint.
EUR/GBP 4-hour chart
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Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
