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EUR/GBP Retreats from 0.8033 Resistance

EUR/GBP ended last week holding under the 0.8033 resistance pivot from July. The week is starting with price moving further south. When you look at the daily chart, you see that EUR/GBP is in a bearish trend (since August 2013), and the bearish trend is still intact. Therefore, when the daily RSI came back to 60, and price at a previous resistance, I am not surprised there were sellers.

(EUR/GBP Daily Chart 8/18)

True - we can see that bulls are losing grip when price reached 0.8033 and the RSI reached 60. However, we might need to see some bearish signals in the 4H chart before looking for a bearish continuation.

(EUR/GBP 4H Chart 8/18)

In the 4H chart, there is still a bullish technical picture based on the moving averages and the RSI. To take this away, we need to see price fall below 0.7970, which would clear below the 50-period SMA in the 4H char and some local support pivots. Also, the RSI should break below 40, and preferably hit 30 to show bearish momentum. 

Then, if there is a bullish attempt, we should look for resistance in the 0.80-0.8020 area, especially if the RSI comes back to 60. If price indeed holds below 0.80, and the RSI holds below 60, we should expect the bearish continuation to materialize. In this scenario, we should first look for price to challenge support factors around 0.7940 which includes the 200-period SMA, and a rising trendline. Then below 0.7930 and that trendline, we can look for downside risk first toward the 0.7875 low on the year, and maybe either further with the 0.7764, 2012-low in sight as well.