The EUR/GBP Downtrend Resumes: An Analysis for Investors
- EUR/GBP ends its pullback and resumes its bearish tempo.
- The RSI is converging bullishly with price, however, signifying a lack of bearish momentum accompanies the latest move.
EUR/GBP has finished pulling back and resumed its downtrend. It has broken below the 0.8317 September 24 low, confirming a lower low and extension towards the next target at 0.8287, the August 2022 low.
It remains in a downtrend on a short and medium-term basis, and given the principle that “the trend is your friend” the odds favor an extension.
EUR/GBP Daily Chart
That said, the Relative Strength Index (RSI) is converging bullishly with price when comparing the September 24 low with the lower low of October 1 (red dashed lines on chart). Although the price has declined, the RSI has not. This signifies a lack of downside momentum accompanies the latest sell-off. This increases the risks it could stall or even pullback.
EUR/GBP has already reached the conservative target for the bear move that began at the August 5 high, at 0.8322. This is the 61.8% extrapolation of the August sell-off. Further downside beyond the target, therefore, could be characterized as “higher hanging fruit” and the whole downward move since the August 5 high may even have completely run its course.
Analysis and Implications for Investors
As the world’s top investment manager and financial journalist, it is crucial to understand the implications of the EUR/GBP downtrend resuming. Here’s what investors need to consider:
1. Trend Analysis:
- The EUR/GBP pair has confirmed a lower low and is heading towards the next target at 0.8287, the August 2022 low.
- With the downtrend intact on short and medium-term basis, investors should consider the trend as a guiding factor for their trading decisions.
2. RSI Signal:
- Despite the recent sell-off, the RSI is not showing significant downside momentum, indicating a potential stall or pullback in the near future.
3. Target Achievement:
- The EUR/GBP pair has already hit the conservative target for the bear move from the August 5 high, suggesting that further downside may be limited.
Overall, investors should monitor the EUR/GBP pair closely, considering the trend, RSI signals, and achieved targets to make informed investment decisions.