Chart of the day EURGBP showing signs of potential short term recovery

Short-term technical outlook on EUR/GBP

Key technical elements

• The recent 5.5% plunge from its 29 August 2017 high of 0.9306 has managed to stall at its key medium-term support of 0.8770 (former swing high areas of Feb/Jul 2013, the lower boundary of a primary degree ascending channel in place since Nov 2015 low & close to the 23.6% of the primary degree up move from Jul 2015 low to Aug 2017 high of 0.9306) (see weekly chart).
• The weekly RSI oscillator has managed to stage a rebound from its corresponding support at the 46% level. In addition, the short-term RSI (hourly) oscillator has also rebounded from a pull-back support at the 50% level and still has further room to manoeuvre to the upside before it reaches an extreme overbought level at 77%. These observations suggest the medium to short-term upside momentum of price action has resurfaced.
• The key short-term support rests at 0.8845 which is defined by the minor congest swing low areas of 19 September 2017 and the 50% Fibonacci retracement of the recent up move from 15 September 2016 low of 0.8773.
• The significant short-term resistance stands at the 0.8970/80 zone which is defined by the upper boundary of a minor ascending channel in place since 15 September 2017 low, the former minor swing low areas of 12/14 September 2017 and a Fibonacci cluster.

Key levels (1 to 3 days)

Pivot (key support): 0.8845

Resistances: 0.8900 & 0.8970/80

Next support: 0.8770

Conclusion

The recent steep decline seen in the EUR/GBP has started to stabilise and it may see at least s potential short-term recovery at this juncture. As long as the 0.8845 key short-term pivotal support holds and a break above the intermediate resistance of 0.8900, the EUR/GBP is likely to shape a further potential push up to target the next resistance at 0.8970/80.

However, failure to hold above 0.8845 should negate the bullish tone to trigger a slide to retest last Friday, 15 September swing low area at 0.8770.

Charts are from eSignal

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