EURGBP staged a powerful rally over the past month to touch an 11-year high near 0.9500, before retreating somewhat. The price structure still consists of higher highs and higher lows above an upside support line, as well as above the 50- and 200-day simple moving averages (SMAs), implying that the broader outlook remains positive. For that to change, the bears would need to pierce below the upside line and also drive the pair below the 0.9000 handle.
Short term oscillators suggest that the latest retreat might continue for now. The RSI crossed below 70 and is pointing lower, while the MACD just crossed below its red trigger line – a negative signal.
If sellers stay in control and break below the upside support line, their next target could be the psychological 0.9000 handle, which was also the low on March 20. If they penetrate below that too, the outlook would turn neutral, setting the stage for a test of the 0.8740 region.
If the bulls retake the wheel though, the first obstacle higher might be the 0.9150 zone, which is very close to where the price battle is currently taking place. A positive violation would turn the focus to the 0.9320 area next, as this was the peak of 2019.
In short, the picture is still positive. A break below the upside support line would be a discouraging sign, but for the outlook to truly turn back to neutral, the pair needs to close below 0.9000.
