- EUR/GBP witnessed some selling on Thursday, albeit remains well within the overnight trading range.
- The formation of a descending triangle supports prospects for a further near-term depreciating move.
- Strength beyond the 0.9065 will negate the bearish set-up and prompt some short-covering move.
The EUR/GBP cross edged lower through the first half of the European trading session and was last seen hovering near the lower end of its daily range, around the 0.9025 region.
From a technical perspective, the cross has been attracting some dip-buying near a horizontal support just ahead of the key 0.9000 psychological mark. However, the attempted positive moves have repeatedly failed near a one-week-old descending trend-line. The combination of horizontal support and descending trend-line constitutes the formation of a descending triangle on short-term charts. The set-up favours bearish traders and supports prospects for an extension of the recent pullback from the 0.9300 neighbourhood.
The negative outlook is further reinforced by the fact that technical indicators on 4-hourly/daily charts have been struggling to gain any meaningful traction. That said, it will still be prudent to wait for a sustained break through the triangle support before placing fresh bearish bets. Below the 0.9000 mark, the EUR/GBP cross is likely to accelerate the fall to the 0.8940-35 intermediate support before eventually sliding to test sub-0.8900 level.
On the flip side, the descending trend-line, currently around the 0.9065 region, might continue to act as a stiff resistance. Some follow-through buying will negate the bearish set-up and prompt some aggressive short-covering move towards the 0.9100 mark. The momentum could further push the EUR/GBP cross towards the 0.9130 resistance zone en-route the 0.9150-60 supply zone. Bulls might then aim to reclaim the 0.9200 round-figure mark.
EUR/GBP 1-hourly chart
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Technical levels to watch
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