EUR/GBP traded slightly higher last week, after it hit support at 0.8415. However, the recovery remained limited near the 0.8455 zone. Overall, the pair remains below the downside resistance line taken from the high of Dec. 8, and thus, even if it recovers a bit more, we will consider the short-term outlook to be negative.
If the bears are willing to take charge from near the 0.8455 territory, we could see them targeting the 0.8415 line again or the 0.8407 barrier, marked by the low of Nov. 25. Should they overcome that hurdle, we could see them pushing towards the 0.8380/85 zone, marked by the lows of Nov. 22 and 24. Another break below that key support area could carry more significant bearish implications, perhaps paving the way towards the low of Feb. 23, 2020, at 0.8330.
Shifting attention to our short-term oscillators, we see that the RSI turned down again, although slightly above 30, while the MACD is negative but still stays slightly above its trigger line. Both indicators detect negative speed, which is in line with the idea of further declines, but the fact that the MACD stays above its trigger line suggests that it may be better to wait for a dip below 0.8407 as such a move will confirm a forthcoming lower low on the 4-hour chart.
We will abandon the bearish case and examine a bullish reversal upon a break above 0.8528. This could also confirm the break above the downside line taken from the high of Dec. 8. The next stop may be at 08553, marked by the high of Dec. 14, where another break could extend the advance towards the 0.8572 zone, near the peak of Nov. 11. If the bulls are not willing to stop there either, we may experience extensions towards the peak of Dec. 8, at 0.8600.
