EUR/GBP Price Analysis: Drops below 0.8800 on fragile sentiment
- EUR/GBP slumped from weekly highs, forming a bearish-engulfing pattern; further downside is expected.
- A clear break below 0.8730 would exert downward pressure on the EUR/GBP; a fall towards 0.8700 is likely to happen.
The EUR/GBP slightly climbs as the Asian Pacific session begins, following a solid session for the British pound, strengthening vs. the shared currency, as delineated by the EUR/GBP sliding 1.19% on Wednesday. The EUR/GBP/ is trading at 0.8745, below its opening price at the time of writing,
EUR/GBP Price Forecast
On Wednesday, the EUR/GBP tumbled below the 20-day EMA, shifting its bias from upwards to neutral-upwards, while the formation of a bearish-engulfing pattern at the end of an uptrend would open the door for further losses. EUR/GBP traders should be aware that the Relative Strength Index (RSI) is neutral, at the 50-midline, almost horizontal, meaning consolidation lies ahead.
The key support levels are the October 4 low at 0.8648, which, once cleared, could open the door for a test of the 50-day EMA at 0.8638. On the flip side, the 20-day EMA at 0.8794 is the first resistance, followed by the 0.8800 figure.
Short term, the EUR/GBP four-hour time frame shows the pair trading above the confluence of the 200-EMA and a two-week upslope support trendline, around 0.8730. If prices tumble below, the EUR/GBP might tumble to the S1 daily pivot around 0.8690, which, once broken, would send the EUR/GBP sliding towards 0.8648, the October 4 low of 0.8648. On the flip side, the intersection of the 20-EMA and the daily pivot point at 0.8780 is the first resistance, followed by the 100-EMA at 0.8807.