EUR/GBP fell sharply on Monday, during the European morning, after it broke below the upside support line taken from the low of November 24th. In our view, this has dismissed the bullish case, but in order to get confident on more declines, we would like to see a clear dip below the 0.8490 zone, which provided support on December 2nd and 7th.
If, indeed, such a break happens, we would expect the bears to push down, towards the 0.8445 barrier, which is defined as a support by the low of November 29th, or towards the 0.8430 territory, marked by the inside swing high of November 23rd. If they are not willing to stop there either, then we could see them diving to the 0.8407 zone, marked by the low of November 25th.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50, but it has just ticked up, while the MACD remains below both its zero and trigger lines. Both indicators detect downside speed, and support the notion for further declines, but the fact that the RSI ticked up adds credence to our choice of waiting for a dip below 0.8490.
On the upside, we would like to see a clear rebound back above 0.8572 before we start examining the bullish case again. The rate would be back above the upside line taken from the low of November 24th, and the bulls may initially target the high of December 8th, at 0.8600, but if they are not willing to stop there, we could see them climbing towards the 0.8623 zone, marked by the high of October 1st.
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