EUR/GBP slid today during the European session, falling below the 0.8360 barrier, which provided support on March 11th. In our view, we already saw the rate starting to print lower highs before that break, but that break confirmed a forthcoming lower low as well, which in our view completes a short-term trend reversal to the downside.
Although the rate rebounded somewhat after hitting support near the very important zone of 0.8310, which has been an attractive entry zone for the buyers in the recent past, we see decent chances for the bears to take charge again soon. However, in order to get confident on larger declines, we would like to see a clear break below that 0.8310 zone. Such a move could initially aim for the 0.8275 zone, marked by the low of March 3rd, the break of which could carry larger bearish implications, perhaps paving the way towards the 0.8220 zone, or the 0.8200 territory, marked by the low of March 7th.
Taking a look at our short-term oscillators, we see that the RSI ticked up after hitting support fractionally above 30, while the MACD remains below both its zero and trigger lines, pointing down. Both indicators detect strong downside speed, but the uptick of the RSI makes us careful that some further rebound may be looming before the next leg south and a potential dip below 0.8310.
We will abandon the bullish case and start examining some decent advances upon a break back above 0.8380. This may discard the reversal and allow the bulls to jump towards the 0.8415 barrier, marked by the peak of March 21st. If they are not willing to stop there, then a break higher could set the stage for extensions towards the 0.8455 zone marked by the highs of March 15th and 17th.
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