- EUR/GBP consolidates on Tuesday in the early European trading hours.
- Additional gains for the pair if price decisively breaks 0.8440.
- The Momentum oscillator holds onto the oversold zone with an upward bias.
EUR/GBP trades cautiously on Tuesday in the European trading hours. The pair confided in a narrow trade band with no meaningful traction. At the time of writing, EUR/GBP is trading at 0.8432, down 0.02% for the day.
EUR/GBP daily chart
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On the daily chart, the EUR/GBP cross currency pair fell sharply after testing the high of 0.8658 on September 29, this also constituted a double top formation with a high made on July 21. A double top candlestick technical formation is a bearish pattern. Furthermore, the spot slipped below the 21-day Simple Moving Average (SMA) at 0.8567, which strengthened the case for the probable downside momentum. However, the price found shelter near the critical support near 0.8330.
If the price breaks above 0.8440, the immediate upside target would emerge at the 0.8465 horizontal resistance level. The Moving Average Convergence Divergence (MACD) holds onto the oversold zone. Any uptick in the MACD would intensify buying pressure toward the 21-day Simple Moving Average (SMA) at 0.8495.
A daily close above the psychological 0.8500 level would see the 0.8525 horizontal resistance level as the next upside target.
However, the Relative Strength Index (RSI) trades at 33, suggesting that the downside risks persist. If the price reverses direction, it could move back to Friday’s low of 0.8421. Next, on the horizon would be the February, 2020 low of 0.8282.