EUR/GBP Price Analysis: Inverted Flag shouts more downside, pound bulls challenge 200-EMA

• An Inverted Flag formation is advocating a sheer downside move ahead.
• The pound bulls have posed a solid challenge to the 200-EMA.
• The RSI (14) has shifted into a bearish range of 20.00-40.00, which adds to the downside filters.

The EUR/GBP pair is oscillating in a minute range of 0.8498-0.8509 in the Asian session. It seems that the FX domain is enjoying the weekend vibes and has paused broadly despite the unavailability of any significant event on Friday. On Thursday, the cross witnessed a sheer downside move after failing to cross the crucial resistance of 0.8620.

The formation of an Inverted Flag chart pattern on an hourly scale is strengthening the pound bulls. Usually, an Inverted Flag chart formation denotes the placement of offers by the initiative sellers. The initiative selling perspective signals the continuation of inventory distribution after a downside move.

Meanwhile, pound bulls are challenging the 200-period Exponential Moving Average (EMA) at 0.8513. The trendline placed from April 14 low at 0.8250, adjoining April 20 low at 0.8283 and May 3 low at 0.8373 respectively will act as major support for the counter.

The Relative Strength Index (RSI) (14) is oscillating in a bearish range of 20.00-40.00, which signals more downside ahead.

Investors should gauge a pullback towards the 50-EMA at 0.8536, which will be a bargain sell for the market participants. An occurrence of the same will drag the asset towards Thursday’s low and May 4 high at 0.8493 and 0.8450 respectively.

On the contrary, euro bulls may regain strength if the asset oversteps Thursday’s high at 0.8616 decisively.  This will drive the asset towards a 29 September 2021 high at 0.8658, followed by a 26 April 2021 high at 0.8720.

EUR/GBP hourly chart