EUR/GBP Price Analysis: Inverted Flag advocates more downside, 0.8450 eyed

• Pound bulls are firmer on an Inverted Flag formation.
• The RSI (14) is struggling to enter the 40.00-60.00 range.
• Declining 20- and 50-EMAs add to the downside filters.

The EUR/GBP pair is displaying topsy-turvy moves in a narrow range of 0.8495-0.8505 in the early European session. A consolidation phase is witnessed by cross after a sheer downside move. The asset witnessed some significant offers while overstepping weekly highs at 0.8590, which dragged the asset sharply lower towards Tuesday’s low at 0.8493.

On an hourly scale, the asset is forming an Inverted Flag that indicates a rangebound move, which is followed by a fresh downside leg. Usually, the rangebound phase denotes the execution of shorts by those investors, which prefer to enter an auction after the establishment of a bearish bias.

The 20- and 50-period Exponential Moving Averages (EMAs) at 0.8509 and 0.8524 respectively are declining, which adds to the downside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is attempting a move in a 40.00-60.00 range but is likely to find barricades near 60.00.

Should the asset drops below Tuesday’s low at 0.8492, the pound bulls will drag the asset towards May 18 low at 0.8450, followed by May 23 low at 0.8433.

Alternatively, the shared currency bulls could dictate the cross if it oversteps Tuesday’s high at 0.8584. An occurrence of the same will send the pair towards May 12 high at 0.8619. A breach of the latter will drive the asset towards the 29 September 2021 high at 0.8658.

EUR/GBP hourly chart