The current price in the environment that has lasted for 1 week is now sliding below 21SMA, heading towards next supports at 0.8353 levels (on weekly terms).
Any break below support below 0.8865 to bring in more weakness.
About a fortnight ago we had urged for early signals of these effects in our last write-up under the title of “FxWirePro: Welcome shorts in EUR/GBP near-month on DMAs crossover and weekly gravestone plummets below 7-EMA”.
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You could now probably make out the slumps that are evidenced in this pair, rest is history by now.
We could still foresee more slumps on cards upon sustenance below 21SMA, downward targets of towards 0.8353 is quite possible by now.
On a broader perspective, the current prices sliding towards 7EMA after rejecting stiff resistance at 0.9222 levels, a break below 7EMAs and 0.8369 is likely to reverse the trend 11 months uptrend.
RSI: Downward convergence on both weekly as well as monthly signals the strength in the .
Stochastic: %D crossover on weekly terms at oversold region and same crossover at the 80s (overbought juncture) signals the momentum.
MACD: crossover on weekly plotting indicates the price declines likely to extend further.
A short term rally back through interim resistance would reduce the immediate bias and leave us back in a range environment but snapping the rallies would allow you a better entry level for fresh short build ups.
As a result, at current juncture contemplating above indications, we uphold shorting contract of mid-month or far-month expiries for target towards 0.8353, 0.8086 or even 0.7822 levels cannot be ruled out upon breach of 1st two targets.
Writers in a contract are expected to maintain margins in order to open and maintain a short position.