EURGBP appears to be on a downward trajectory. The pair has been in a descending channel during the past two months, falling from a high of 0.8116 and breaking below the key 0.80 level and below the 50-day and 100-day moving averages. This brings a shift to the recent bullish bias from 0.6981 to 0.8116.
There was an upward move in the past two days but prices stalled just below the 100-day moving average, which will likely restrict any upside moves. Failure to rise above this resistance area at 0.7796 would likely see the market continue lower within the descending channel that started from the peak of 0.8116 on April 7.
The RSI also indicates that upside price momentum has stalled, since the indicator reached the 50 level and was unable to rise above it, suggesting further downside risk exists. Important support lies at the 50% Fibonacci level at 0.7547, which is the retracement level of the upleg from 0.6981 to 0.8116. The 200-day moving average around 0.7530 also acts as a cushion for downside moves.
A break below these key support levels would significantly shift the bias to a more bearish one as the market would have erased more than half of the uptrend from the November low to the April high (0.6981-0.8116).
If the market remains above the 50% Fibonacci and rises above the 50-day moving average then it could be said that the recent pullback was just a correction of the uptrend from 0.6981 to 0.8116.
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