EURGBP has reversed back to the upper surface of the Ichimoku cloud around 0.8730. Positive sentiment appears revived after the bounce off the supportive 13-month low of 0.8470.
Further backing this short-term view are the upward slopes of the 20- and 40-day simple moving averages (SMAs). However, for now the technical oscillators reflect contradicting signals. The RSI, in the positive area, remains flat in bullish territory. That said, stochastic %K line, which has deflected off the 80 level and completed a bearish overlap of the fading %D line, is reflecting weakness in price.
If buying interest picks up, early tough resistance could occur at the 0.8730 high, where the ceiling of the cloud also resides. A violation of this level may shoot the pair to challenge the 0.8790 barrier. If advances endure past these obstacles, buyers may then target the 200-day SMA at 0.8895.
Otherwise, if sellers sink deeper, the 20-day SMA at 0.8640 and the 40-day SMA at 0.8600 could provide the initial key constrictions necessary to sustain the climb. Steeper declines under these lines would have to tackle a more durable support section from the 13-month bottom of 0.8470. Extending lower, the decline could encounter the 0.8280 support.
Overall, the very near-term picture remains positive above the 13-month low of 0.8470, while a break below that would cement negative worries again.
