Strong rebound needs more evidence to signal reversal
The cross rebounds strongly on negative Brexit news on Wednesday, sidelining immediate downside risk, as strong bullish acceleration fully retraced Tuesday’s 0.7% fall and spiked to four-day high at 0.9123.
Fresh negative sentiment for sterling can spark further rise of EURGBP pair, with improving daily studies being also supportive.
Momentum turned north and stochastic emerged from oversold territory, with action being also supported by rising daily cloud.
However, current bounce is still not a sign of reversal, as such scenario would require extension and close above 0.9133 (Fibo 38.2% of 0.9324/0.9015) that will re-confirm positive signal on completion of bullish engulfing pattern on daily chart.
Cautious dip-buying above 4-hr 10DMA with tight stops, looks like preferred near-term scenario, as markets await fresh Brexit-related news, with further signs of increasing risk of no-deal Brexit, expected to keep sterling under pressure.
Res: 0.9088; 0.9102; 0.9123; 0.9133
Sup: 0.9066; 0.9057; 0.9041; 0.9015