Support factors: The EUR/GBP has been falling sharply since the 0.8164 high. As we come to the Friday session of this week (10/26), it is trading near some key factors in the short-term. There is the 0.80 psychological barrier. 38.2% retracement is at 0.8008. There is also a rising trendline support just below 0.80. The 4H RSI is below 30, a sign of strong bearish momentum starting, but also a near-term sign of oversold condition.
Breakout targets: Clearing below 0.80 and the rising trendline first opens up the 50% retracement at 0.7960, which was also a previous resistance pivot. When the RSI in the daily chart gets to 40, we should be aware of possible support IF there is more bullish momentum to be built.
Bounce scenario: If the 0.80 and the rising trendline holds, the EUR/GBP first focuses on the resistance pivots between the 0.81 psychological handle and the next one at 0.8120. A break then focuses on the 0.8160 area for a break for bullish continuation.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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