FxWirePro: EUR/GBP capped below 5-DMA at 0.9230, bearish divergence keeps scope for downside, stay short

• EUR/GBP remains capped below 5-DMA at 0.9230 after failure at 0.93 handle, intraday bias bearish.
   
• GBP buoyed after latest UK manufacturing PMI surpassed estimates and rose to 4-month high of 56.9 in August.
   
• The reading was much better than 55 expected and previous month's reading of 55.3.
   
• Formation of Gravestone Doji at highs along with bearish RSI divergence keeps scope for downside.
   
• We see drag upto 20-DMA at 0.9136 on charts. Breach of 20-DMA finds next major support at 0.9088 (23.6% Fib retrace of 0.83822 to 0.93064 rally).
   
• On the upside, the pair finds major trendline resistance at 0.9310. We see upside only on break above.

Support levels - 0.92, 0.9152 (20-DMA), 0.91, 0.9088 (23.6% Fib retrace of 0.83822 to 0.93064 rally)

Resistance levels - 0.9310 (Trendline resistance), 0.94, 0.9411 (Oct 2009 high), 0.9477 (88.6% Fib retrace of 0.9804 to 0.6930 fall)

Call update: We had given a short call on the pair (http://www.econotimes.com/FxWirePro-EUR-GBP-fails-to-hold-above-093-handle-close-below-5-DMA-could-see-further-weakness-874643). TP1 hit.

Recommendation: Bias lower, stay short for further downside.

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