EURGBP rally goes on; focus on 0.8935 key resistance

EURGBP gained further positive traction this week, with the rally peaking at a fresh five-month high on Tuesday, marginally below the key resistance level of 0.8935. Technically the market could stretch the uptrend higher as long as the price keeps increasing its distance above its simple moving averages (SMA). The rising Tenkan-sen and a strong MACD above its red signal line is an indication that momentum may continue to the upside as well. Yet with the RSI moving sideways in an overbought area for almost a month now, downside corrections cannot be ruled out either.

The pair is currently facing immediate resistance from the 0.8935 number, while slightly higher another barrier maybe standing around 0.8975. Clearing those levels, buyers could increase their long positions, probably driving the price until the December-January peaks of 0.9060.

On the downside, the red Tenkan-sen at 0.8875 and the 20-day SMA at 0.8832 would be closely watched ahead of the 0.8800 psychological level. A decisive close under the 200-day SMA could confirm further selling, but a steeper decline may likely come below the 0.8720 support mark.

In the medium-term picture, which looks at the three-month performance, the sentiment turned even more bullish as the price continues to crawl above the 0.8676 barrier. The positive slope in the 50-day SMA is also adding optimism for a brighter outlook.