Technical Analysis – EURGBP flies above Ichimoku cloud; RSI overbought
Posted on July 29, 2019 at 9:51 am GMT
Christina Parthenidou, XM Investment Research Desk
An impressive rally followed the rebound on the 23.6% Fibonacci of the upleg from 0.8489 to 0.9050, with EURGBP spiking above its simple moving averages (SMA) and the Ichimoku cloud in the four-hour chart.
In the meantime, the RSI seems to be slowing down in the overbought territory, flagging that the rally is exaggerated, and therefore downside corrections could soon take place. Nevertheless, as long as the MACD keeps gaining ground in the positive terittory and well above its red signal line, any weakness could appear temporary.
The bulls could initially rest near the 0.9037 barrier before challenging the 0.9050-0.9060 former resistance zone. A significant step higher should beat a taller wall around 0.9100 to bring a fresh buying towards a more important resistance of 0.9150.
Alternatively, if the market proves overbought and the bears retake control, the pair could fall into the 0.9000-0.8990 zone, while a sharper sell-off under the 50-period SMA could open the door for the 200-period SMA, which is currently laying around a key support area.