- EUR / GBP continued to gain ground on Thursday and reached peaks close to two months.
- The short-term technical configuration favors the bulls and supports the prospects of further gains.
- Any withdrawal could still be considered a buying opportunity and help limit the downside.
A sudden recovery in the shared currency pushed the EUR / GBP cross to almost two months during the mid-European session on Thursday. Bulls may now seek to extend momentum beyond the key psychological mark of 0.9000.
The level mentioned marks the Fibonacci level of 38.2% from the drop of 0.9500-0.8671. A convincing breakthrough will be seen as a new trigger for bullish traders and will set the stage for an extension of the recent rally levels below 0.8700.
Meanwhile, the daily chart oscillators have maintained their upside bias and are still away from extremely overbought conditions. The configuration seems to tilt in favor of bulls and support the prospects of a new appreciation in the short term. Hence a later resistance towards the intermediate resistance 0.9060-65, en route 50% Fibo. level near the mark at 0.9100, seems a separate possibility.
On the other hand, the 0.8960-50 region now appears to be protecting the immediate downturn, which, if broken, could accelerate the downturn towards support for weekly lows near the 0.8900-0.8895 area. Any further decline could still be considered a buying opportunity and should help limit the decline to almost 23.6% of Fibo. level, around the 0.8875 area.
Failure to defend the aforementioned support levels, leading to subsequent weakness below the middle of 0.8800 could cancel any short-term upside bias and make the crossover vulnerable to resume it before / well-established downward trajectory.