EUR/GBP climbed higher on Monday, breaking above the 0.8472 zone, which provided resistance on Oct. 28, and acted as decent support between Oct. 7 and 13. Today, the rate met resistance at 0.8513, and then it pulled back.
Overall, the pair has continued to print higher highs and higher lows above a short-term upside support line since Oct. 26, and thus, even if we see some further retreat, we will continue to see a positive short-term picture.
As we already noted, the retreat may continue for a while more, perhaps towards the 0.8472 barrier, from which the bulls may retake charge.
This may result in a rebound and another test near the 0.8513 level, or near the peak of Oct. 6, at 0.8526. A break higher may pave the way towards the inside swing low of Oct. 1, at 0.8545, the break of which could carry extensions towards the peak of Oct. 4, at 0.8573.
Looking at our short-term oscillators, we see that the RSI turned down after hitting its 70 line, while the MACD, although above both it's zero and trigger lines, shows signs that it could start topping as well.
Both indicators suggest that the high upside speed may start easing somewhat now, which aligns with the view that some further retreat may be looming for now.
To abandon the bullish case and start examining whether the bears have gained complete control, we would like to see a dip below 0.8462.
This may signal the break below the aforementioned upside line and could pave the way towards the low of Oct. 29, the break of which may take the rate to the low of the day before, at around 0.8420.
Slightly lower lies another, more critical barrier, the 0.8402 zone, defined as a support by the low of Oct. 26.
