Daily and 4H: The EUR/GBP's rally yesterday turned out to be just a clear-out as we had suspected. (Refer to Daily Technical Update 11.30.2009 EUR/GBP.)
Also we saw the bearish divergence with stochastic in the 4H followed by a decline. This decline completed topping action and suggests reversal possibility.
Reversal may be minor, and the market may support at 0.9050. Or reversal may be a more complex one where a break and further retracement towards 0.8950 is possible.
So the short-term is bearish, but the medium-term outlook is neutral to bullish. If the 0.9050 holds, and the market rallies, it is likely bullish. This is the preferred scenario, from which we would stalk for bottoming at the important retracement levels.
If the market cannot break below 0.9050 in the US session, we may have the a rally in the Asian session.
But if it breaks, we have have a decline to 0.8950 and even further to 0.8850.
A break below 0.8840 would spell a medium-/long-term decline.