Technical Analyst, Saxo Bank
Summary: GBPUSD close to test key support at 1.2344. A close below can lead to a sell-off. EURGBP breaking above falling trendline. A close above 0.8870 could pave the road towards 0.90
GBPUSD Support at around 1.2344 is key. A close below is likely to lead to a sell-off down to 1.2175 possibly dipping down to the 0.618 retracement at around 1.2087.
55 and 100 Moving Averages will provide some support just above the 1.2175 support.
RSI still positive but with divergence on the peak last week. GBPUSD seems ripe for a correction.
If GBPUSD can find Bids and close above 1.2547 uptrend is set to be extended to 1.2667 level.
However, from the weekly chart GBPUSD has so far failed to close above resistance at around 1.2446 and could be in the process of forming a top and reversal pattern – a possible Evening Doji candle formation. A bearish end to the week is needed for that to unfold.
EURGBP is at the time of writing breaking above short-term falling trendline. A close above minor resistance at around 0.8870 could lead to a rally to previous peaks and resistance at around 0.8990-0.90.
If EURGBP closes above 0.8870 it would also have closed above the Cloud and RSI above 60 indicating likely higher EURGBP levels.
But if EURGBP slides back to close below 0.8790 support at around 0.8720 is likely top be tested once again
Medium-term if EURGBP closes above 0.90 a move towards 0.92 would be in the cards.
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