EURGBP forms bearish engulfing and long legged doji patterns at 0.8985 and 0.9010 levels that plummets prices below DMAs, amid this bearish sentiment, the pair is attempting to breach below strong support at 0.8899 levels.
For now, more slumps seem to be on cards upon bearish DMA & MACD crossovers, and both leading oscillators substantiate intensified bearish momentum.
Next stiff resistance levels are observed at 0.8966 (i.e. 7DMA levels). However, it is quite tough for the markets to push up through that region as the momentum which is in bearish favor approaching oversold zone, but then, you could notice %d crossover.
Currently, bulls are struggling to hold onto 0.8899 levels, if any failure swings are seen, then we expect a pullback from there.
A decline through 0.8900-0.8870 support is needed to suggest a more significant turn back into the range around 0.8800 and potentially a re-test of the 0.8720-0.8690 range lows.
For now, the greater risk is to merely range at these upper levels. Long term, we still cannot rule out a retest of the 2008 highs at 0.9802.
However, the risks of that decrease the longer we remain within this medium-term range under 0.9300-0.9710. On a broader perspective, the current prices remain above 7EMA despite this month’s slumps and go non-directional (refer monthly chart), leading oscillators are bullish bias and the lagging indicators indecisive but mildly bullish.
Trade tips: Well, on trading perspective, at spot reference: 0.8903 levels, it is advisable to tunnel spreads using upper strikes at 0.8937 and lower strikes at 0.8866 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX keeps dipping below but remains above lower strike on the binary expiry duration.
On hedging grounds, we advocate initiating longs in EURGBP futures contracts with a view to arresting further upside risks.
Currency Strength Index: FxWirePro's hourly EUR spot index is at shy above -42 levels (which is bearish), while hourly GBP spot index is edging higher at 85 levels (bullish) while articulating (at 12:04 GMT). For more details on the index, please refer below weblink: