- EURGBP faces difficulty in completing a double bottom pattern above 0.8579
- Technical indicators reflect a lack of bullish momentum
- ECB rate decision could generate fresh volatility at 12:15 GMT
- ECB governor Lagarde holds press conference at 14:15 GMT
EURGBP drifted lower after it got another rejection from November’s resistance trendline and the 38.2% Fibonacci retracement of December-February downleg at 0.8579 earlier this week.
The series of higher lows that began in March and the rising 20-day simple moving average (SMA), which is currently distancing itself above the 50-day SMA, are maintaining optimism that the double bottom pattern around 0.8500 could develop into a bullish trend above 0.8579. The negative momentum in the technical indicators, however, suggests that any potential improvement could come with some delay.
If the price closes clearly above 0.8589, the 200-day SMA could be the next obstacle near the 50% Fibonacci mark of 0.8600. A break higher could peak within the 0.8620-0.8630 region, which includes the 61.8% Fibonacci level, or pick up steam towards the 78.6% Fibonacci of 0.8670.
In the event the bears squeeze the price below the nearby 0.8550 support area, where the 23.6% Fibonacci and the 50-day SMA are placed, the spotlight will fall on the 0.8528 restrictive zone. A step lower would violate the bullish double bottom pattern, bringing the critical base of 0.8500 under examination. If the bears resume the downtrend below that floor, selling pressures could intensify towards the 0.8400-0.8435 area.
Summing up, EURGBP cannot warrant an immediate bullish breakout above the tough 0.8579 barrier, despite the improved trend signals. Yet, only a slide below 0.8528 would increase selling interest.
