- The 4-hour RSI oscillator has traced out a bullish divergence condition at its oversold region.
- A break above the 50-day moving average now acts as a 0.8600 intermediate resistance may rekindle another leg of short-term rebound for EUR/GBP.
- The next resistance stands at 0.8720 which is also the 200-day moving average.
The recent 157 pips slide seen on the EUR/GBP cross pair from its 0.8701 high printed on 19 July 2023 to 27 July 2023 intraday low of 0.8544 has managed to find support at the former medium-term descending channel resistance from 26 April 2023 high now turns pull-back support at the 0.8550 level.
EUR/GBP short-term trend as of 31 Jul 2023 (Source: TradingView, click to enlarge chart)
In addition, the 4-hour RSI oscillator has shaped a bullish divergence condition at its oversold region and inched backed up above the 50 level today, 31 Jul which suggests that short-term downside momentum has eased.
A clearance above the intermediate resistance of 0.8600 (also the 50-day moving average) sees the next resistance coming at 0.8720 (congestion area of 13 May to 23 May 2023 & 200-day moving average).
On the flip side, a break below 0.8505 key medium-term pivotal support invalidates the short-term rebound scenario to expose the next support at 0.8410.
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