EUR/GBP traded higher today, after it hit support at the crossroads of the 0.8495 level and the upside support line taken from the low of Nov. 24. However, the recovery remained limited near the 0.8535 barrier, which provided resistance on Nov. 15 and 30 and support between Nov. 8 and 12. Overall, as long as the aforementioned upside line remains intact, we consider the short-term picture positive.
A break above 0.8535 would confirm a forthcoming higher high and may encourage the bulls to climb towards the peak of Nov. 11, at around 0.8572. If they are unwilling to stop there, then a higher break could extend the trend towards the peak of Nov. 5, at around 0.8595.
Turning our gaze to our short-term oscillators, we see that the RSI rebounded from near its 50 line and now points up, while the MACD, although below its trigger line, lies above zero and shows signs of bottoming. Both indicators suggest that the rate may have started picking up upside speed again, which increases the chances for further advances in the short run.
On the downside, we would like to see a dip below 0.8495 before we start examining a short-term bearish reversal. This will confirm the break below the pre-discussed upside line and a forthcoming lower low on the 4-hour chart.
The rate could then travel towards the 0.8445 barrier, marked by the low of Nov. 29, the break of which could aim for the 0.8430 zone, characterized by the inside swing high of Nov. 23. If that barrier doesn’t hold either, then its break could lead the rate towards 0.8407, marked by an intraday swing low formed on Nov. 25.
