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EUR/GBP Continues to Develop a Price Bottom

Last week, EUR/GBP failed to push above the 0.8033 resistance pivot and fell below a rising trendline from July. This signaled bearish continuation because price also fell below the moving averages, and the RSI held below 60 to show maintenance of the bearish momentum. 

However, price stalled around 0.79, and EUR/GBP once again looks like it is trying to develop a price bottom. 

EUR/GBP Daily Chart 9/3

(click to enlarge)

Central Bank Risks:
With the Bank of England, then European Central Bank monetary policy statements and press conferences looming tomorrow, we should monitor how EUR/GBP reacts. If price pushes above 0.8040, it will form a price bottom and break above the 100-day SMA. If the daily RSI also pushes above 60, we should be looking at some bullish correction at least in the short-term. 

Resistance Against the Correction: There are a couple of resistance factors. First 0.81 handle ,then the 0.8150-0.8165 area. We should limit the bullish outlook to the latter, which contains a previous support/resistance pivot, and is reinforced by the 200-day SMA as well as a falling trendline that comes down from the July 2013 high of 0.8765, where the current downtrend originated.

A break above 0.8170 would then introduce a major bullish outlook. Otherwise, EUR/GBP has only shifted sideways, and still has the 2-year downtrend on on its back. 

Bearish Outlook: Now if EUR/GBP does not put in a price bottom after the Central Banks, look for it to continue a downtrend, with downside risk first toward the 0.7873 low on the year, then the 0.7750 2012-low.