- Persistent underperformance of the EUR against GBP as the EUR/GBP cross pair reintegrated below the 200-day moving average.
- The hourly RSI momentum indicator of EUR/GBP has flashed out a bearish momentum condition.
- Watch the 0.8615 key short-term resistance with intermediate supports coming in at 0.8550 and 0.8500.
In the long term, the EUR/GBP cross pair is still evolving within a major downtrend phase as depicted by its price actions’ oscillations within a descending channel in place since the 3 February 2023 swing high of 0.8979 (see Fig 1)
The major downtrend phase has remained intact since 3 February 2023
Fig 1: EUR/GBP medium-term trend as of 9 Jan 2024 (Source: TradingView, click to enlarge chart)
Short-term downside momentum has resurfaced
Fig 2: EUR/GBP minor short-term trend as of 9 Jan 2024 (Source: TradingView, click to enlarge chart)
Recent price actions have staged a bearish breakdown below its 200-day moving average at the start of 2024 on 3 January.
On the hourly chart, the price actions have taken the form of a minor descending channel with a bearish momentum reading seen in the hourly RSI momentum indicator as it staged a bearish reaction right below its parallel resistance at the 50 level.
These observations suggest that the EUR/GBP is likely to be staging a potential bearish impulsive downmove sequence within its major descending channel.
Watch the 0.8615 key short-term pivotal resistance with the next intermediate supports coming in at 0.8550 and 0.8500 (psychological & the swing low areas of 11 July/23 August 2023) next.
On the other hand, a clearance above 0.8615 negates the bearish tone for a minor corrective bounce to see the next intermediate resistance coming in at 0.8650 (also the 200-day moving average).
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Kelvin Wong