EUR/GBP Analysis: Key Support Tested After Sharp Rally
EUR/GBP has pulled back to key support levels after a significant rally on Thursday, indicating a potential change in trend for the pair. Here’s a breakdown of the current situation:
Key Points:
- EUR/GBP pulled back to the base of its multi-month range at 0.8380 after a strong surge on October 3.
- The pair may have shifted its previous downtrend bias and is now showing signs of a short-term uptrend.
- A break above the October 3 high of 0.8434 would confirm a bullish reversal and could lead to further upside potential.
EUR/GBP Daily Chart Analysis
If the bullish scenario plays out, EUR/GBP is likely to target key resistance levels, including:
- The cluster of Moving Averages in the 0.8450s.
- The high of the consolidation channel.
- The green 200-day Simple Moving Average (SMA) at 0.8510.
The blue Moving Average Convergence Divergence (MACD) indicator has also signaled a potential trend reversal by crossing above its red signal line.
Next Steps for EUR/GBP
To maintain the bullish momentum, EUR/GBP needs to stay above key support levels. Here’s what to watch for:
- A break below 0.8311 and the October 1 lows could reconfirm bearish sentiment and suggest a return to the medium-term downtrend.
- In this scenario, downside targets include 0.8284 (Fibonacci 78.6% extrapolation of the August decline) and 0.8236 (100% extrapolation of the same decline).
Overall, EUR/GBP is at a critical juncture, with potential for both bullish and bearish outcomes depending on key support and resistance levels.