200-day moving average key resistance: EUR/GBP technical analysis
EUR/GBP technical analysis shows that the recent rally towards the 0.8700 level has created a huge bullish reversal pattern. A near-term pullback towards the 0.8500 level may also be on the horizon.
The EUR/GBP pair has moved to its highest trading level since October 2019, as the euro currency rallied across the board, while the British pound slumped over hard-Brexit concerns.
EUR/GBP technical analysis shows that the pair’s key 200-day moving average should decide the next major directional move.
EUR/GBP medium-term price trend
The euro currency staged a major up move against the British pound last week, with the pair gaining close to 400 points.
EUR/GBP analysis shows that a bullish inverted head and shoulders pattern is taking shape across the daily time frame.
The daily time frame shows that the inverted head-and-shoulders pattern has an upside projection of around 400 points, which could send the EUR/GBP pair towards the 0.9100 level over the medium-term.
Failure to surpass the pair’s 200-day moving average could result in a pullback towards, and the creation of a right-hand shoulder to complete the bullish pattern.
Key medium-term support for the EUR/GBP pair is found at the 0.8600 and 0.8480 level, while the 0.8810 and 0.8890 levels are major resistance. Dip buyers may be lurking on any meaningful pullbacks.
EUR/GBP short-term price trend
EUR/GBP technical analysis shows that the pair has a strong bullish bias over the short-term while price trades above the 0.8450 level.
The lower time frame shows that bearish MACD price divergence has formed, and extends down towards the 0.8500 level.
With this in mind, repeated failure around the 0.8700 level should result in a meaningful short-term correction.
Technical indicators such as the RSI and Momentum appear extremely overbought on the four-hour time frame, and have reached levels not seen since July 2019.
Overall, watch out for a strong corrective move back towards the 0.8500 level as the bearish MACD divergence unwinds.
EUR/GBP technical summary
EUR/GBP analysis points to an upcoming decline towards the 0.8500 level if the pair fails to overcome the 0.8700 level. Moves back towards the 0.8500 level are likely to be used as a buying opportunity.