EURGBP slipped below the 20-day simple moving average (SMA) on Tuesday and closed marginally below the ascending trendline that has been strictly supporting the market since the sharp rebound in mid-February.
Another negative close below that line could strengthen warnings that the weakness in the price may persist, confirming the somewhat discouraging signal the falling RSI is currently providing.
To the downside, the 50-day SMA and the lower Bollinger band, both around 0.8930, may prove to be game changers if they immediately reject additional declines. Otherwise, the sell-off may continue until the 0.8865 key support level, a break of which would ruin the pair’s two-month old positive structure, shifting the spotlight towards the 0.8780 barrier.
Alternatively, if the price manages to return above the trendline, the bulls may push harder to overcome resistance around 0.9055 and run towards 0.9140. Beyond June’s peak of 0.9175 and higher than the dashed descending trendline (tentative), the rally may pick up steam towards 0.9290.
Looking at the six-month picture, the neutral outlook remains intact as long as the pair is trading below the 0.9497 top.
In brief, the short-term bias for EURGBP is viewed as neutral-to-bearish, with immediate support expected to occur around 0.8930.