EUR/GBP Price Analysis: Reverses an early dip to 5-week low, sub-0.8400 levels

• EUR/GBP drops to fresh five-week lows and rebounds.
• Bulls showed some resilience below the 0.8400 level.

The EUR/GBP cross dropped to fresh five-week lows on Friday, albeit showed some resilience below the 0.8400 round-figure mark and quickly recovered around 30-40 pips in the last hour.

The mentioned handle marks 61.8% Fibonacci of the 0.8276-0.8602 recent move up and coincides with a descending trend-line, which should now act as a key pivotal point for short-term traders.

The cross remains well below its important daily moving averages – 50, 100 and 200-day SMA and hence, some follow-through selling should pave the way for a further depreciating move.

Moreover, technical indicators on the daily chart have been drifting lower in the negative territory and reinforce prospects for the resumption of the prior/well-established bearish trend.

However, oscillators on the 4-hourly chart have been flashing oversold conditions, warranting some caution for aggressive traders and initiating any fresh bearish positions.

Having said that, a sustained break below the 0.8400 mark might turn the cross vulnerable to slide back towards challenging mid-December swing lows – around the 0.8276 region.

EUR/GBP daily chart