- EUR/GBP attracts some dip-buying near the 0.8835 resistance-turned-support zone.
- The set-up still seems tilted in favour of bearish trades, albeit warrant some caution.
The EUR/GBP cross reversed an early dip to near four-week lows and jumped back above the 0.8900 round-figure mark during the early European session.
The cross once again showed some resilience, rather attracted some dip-buying near a horizontal resistance breakpoint, around the 0.8865 region. The mentioned support should now act as a key pivotal point for short-term traders and help determine the pair's next leg of a directional move.
Meanwhile, the cross has already confirmed a near-term bearish break below a short-term ascending trend-channel. This coupled with the formation of a bearish head and shoulders chart pattern seems to have set the stage for a further near-term depreciating move for the cross.
However, technical indicators on the daily chart – though have been losing positive traction – are yet to confirm the near-term bearish outlook. This, in turn, makes it prudent to wait for a sustained break through the mentioned support before placing any aggressive bearish bets.
Below the mentioned support the cross is likely to accelerate the fall towards the 0.8815-10 area with some intermediate support near the 0.8835 level. The downward trajectory could further get extended below the 0.8800 mark, towards the next major support near the 0.8760 region.
On the flip side, any subsequent move up is likely to confront a stiff resistance near the 0.8835-40 region, above which the cross might aim to reclaim the key 0.9000 psychological mark. A sustained strength beyond the mentioned level is needed to negate any near-term bearish bias.
EUR/GBP 4-hourly chart
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Technical levels to watch
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