EUR/GBP traded higher on Friday, after hitting support near the psychological 0.9000 zone on Thursday. Overall, the rate is printing higher highs and higher lows above a short-term upside support line drawn from the low of November 23rd, while since Tuesday, it’s been trading above a prior downside resistance line taken from the high of September 11th. All these technical signs paint a positive near-term picture in our view.
If the bulls are strong enough to stay in the driver’s seat, we may see them targeting Wednesday’s high, at 0.9084, soon. That said, a break above that zone is needed to confirm a forthcoming higher high and signal the resumption of the prevailing short-term uptrend. Such a move could initially target the high of October 26th, at around 0.9105, the break of which may set the stage for extensions towards the 0.9150 territory, marked near the peak of October 20th.
Looking at our short-term oscillators, we see that the RSI has rebounded from near its 50 line, and is now pointing up, while the MACD, although below its trigger line, lies within its positive territory and shows signs of bottoming as well. Both indicators suggest that the rate is picking up upside speed again, which is inline with our view for further advances.
In order, to start examining the bearish case, we would like to see a clear dip below the 0.8965 barrier, and the aforementioned downside line drawn from the high of September 11th. The bears may then get encouraged to push the action towards Tuesday’s low, at 0.8928, where another break may extend the decline towards the 0.8867 area, defined as a support by the low of November 23rd.
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