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EUR/GBP Technical: Recent downside momentum subsided

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  • 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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Kelvin Wong

Kelvin Wong

Senior Market Analyst, OANDA at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.

Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.

In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
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