EURGBP Nears Strong Support Levels, Bounce Possible
EURGBP price, charts and analysis:
- The EURGBP price is closing in on a broad band of support that should limit its downside near-term.
- A bounce from there is possible, while a break could prompt sizeable further losses.
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EURGBP nears major support zone
The EURGBP price has fallen sharply since hitting a 0.9099 high on August 28. However, it is now close to a band of support that is likely to curb further major losses near-term.
Having already broken downward through the 20-day and 50-day simple moving averages, it is now close to both the 100-day sma at 0.8870 and the 200-day sma at 0.8832. Moreover, the significant August 2 low lies at 0.8854 and a rising trendline connecting the higher lows recorded since mid-April is close to the same level.
Taken together, this means that there is major support between 0.8832 and 0.8870 and the price could bounce from there. However, if it breaks through, there is a chance of a dive to the mid-June lows between 0.8718 and 0.8729.
EURGBP Price Chart, Daily Timeframe (February 19 – September 11, 2018)
As yet, the 14-day relative strength index, or RSI, is still above the 30 oversold level, suggesting further small losses are possible.
Putting all this together, a rally from the current lows would be no surprise but any trader deciding to go long would be wise to place a stop around 0.8850 and turn bearish at that point. To the upside, a reasonable first target would be the 20-day moving average, currently at 0.8989, with a stronger rally potentially taking the price up to or even above the August 28 0.9099 high.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.