EURGBP broke below its long-term descending trend line back in June, confirming a shift from the sideways-to-lower grind that had persisted for months.
The pair plunged to a swing low around 0.8457 before staging a retracement back up toward the broken trend line, which now looks to be holding as resistance rather than support.
The Fibonacci retracement tool drawn from the 0.8457 low to the 0.8687 swing high shows where the pullback has been finding footing. Price rallied as far as the 61.8% Fib near the .8600 major psychological mark before turning lower again, and is now hovering near the 50% level at 0.8572.
A continuation of the slide could test the 38.2% Fib at 0.8545, which sits just above the swing low. If the trend line and the Fib levels effectively cap gains, EURGBP could resume its slide back toward the 0.8457 swing low or lower.
On the other hand, a break back above the trend line and the 61.8% Fib could open the door to a larger corrective bounce before sellers try to reassert control.
On the moving average front, the 200 SMA remains above the 100 SMA, confirming that the path of least resistance is still to the downside. The gap between the two indicators has been narrowing as the pullback unfolded, but the recent turn lower suggests sellers could be stepping back in before a bullish crossover has a chance to form.
Stochastic reached the overbought region during the bounce and is now curling back down, reflecting fading bullish momentum. RSI also climbed but stopped short of overbought territory before rolling over, which points to sellers regaining the upper hand rather than a fresh leg higher.
EURGBP could take cues from overall sentiment, as there are no major reports due from both the eurozone and UK economy during the week.
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