EUR/GBP Technical: Still evolving in a medium-term downtrend

• The medium-term downtrend phase of EUR/GBP in place since the 3 February 2023 high of 0.8979 remains intact.
• Recent price actions have staged a decline from its 28 June 2023 high of 0.8658 and reintegrated below the 20-day moving average.
• Watch the key short-term resistance of 0.8610 to maintain a bearish tone

Since its 3 February 2023 high of 0.8979, the EUR/GBP has continued to evolve in a medium-term downtrend phase as depicted by its price actions that oscillated within a descending channel.

Fig 1: EUR/GBP short-term and medium-term trends as of 5 Jul 2023 (Source: TradingView, click to enlarge chart)

Minor corrective rebound may have ended

In the past two weeks, the EUR/GBP has staged a minor corrective rebound within the medium-term downtrend phase where it rallied by 140 pips from its 0.8518 low printed on 19 June 2023 to a high of 0.8658 on 28 June 2023.

The corrective rebound has managed to stall (the second time) after a retest on the pull-back resistance of the former major trendline support from the 7 March 2022 low and reintegrated back below its 20-day moving average yesterday, 7 July. These observations suggest that the corrective rebound may have ended.

Downside momentum intact

The 4-hour RSI oscillator has not hit its oversold region which suggests that the recent slide from the 28 June 2023 high of 0.8658 has not been overextended to the downside.

Watch the 0.8610 short-term pivotal resistance to maintain the bearish tone with the next supports coming in at 0.8520 and 0.8490 (the lower limit of the medium-term descending channel & Fibonacci extension/retracement cluster).

On the other hand, a clearance above 0.8610 sees the next resistances coming in at 0.8670 and 0.8730 (200-day moving average).

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