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EURGBP Penetrates above Downward Sloping Channel

EURGBP has jumped above the downward sloping channel which was holding since October 2017. The price broke the 0.8900 handle and is trading above the 20 and 40 simple moving averages in the short-term timeframe. When looking at the bigger picture the pair lacks a clear tendency and the next days could be significant in case of a continuation of the slight upward movement.

In the daily timeframe, prices rebounded on the 0.8730 support level and based on the technical indicators, momentum is strong to provide a sustained move higher. The stochastic oscillator entered the overbought zone, while the MACD oscillator entered the positive territory and is holding above its trigger line.

If price action remains above the sloping channel, there is scope to test the 0.8930 resistance level. This is considered to be a strong resistance area which has been rejected a few times in the past. Rising above it could see prices re-testing the 0.8980 barrier.

On the flip side, in case of a failure to end the day above the upper band of the channel, the focus could shift to the downside towards the 20 and 40 SMAs near 0.8810 and 0.8840 respectively. If this level is breached, it could increase downside pressure and the price could move towards the 0.8730 support.

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