EUR/GBP sustaining weakness below 0.8600 handle

Upbeat sentiment surrounding the British Pound dragged the EUR/GBP cross below 0.8600 handle to a hit 7-day low. Having posted a session low at 0.8585, the cross retraced few pips but remained below 0.8600 handle, in negative territory for second consecutive day. 

A broadly weaker greenback is boosting both, the shared currency and the British Pound, and has led to range-bound trading action. However, an unimpressive flash Euro-zone PMI prints for August is assisting the British Pound to outperform its European counterpart.

How strong has the move been?

The hourly FXStreet OB/OS Index is showing neutral conditions, alongside the FXStreet Trend Index which is slightly bearish. At the time of writing, RSI is neutral at 45.08, up from 38.41 at the last hour close, while ADX is ranging at 25.74, down from 37.57 previous.

Meanwhile, daily RSI is in neutral territory at 60.92. On the hourly EUR/GBP chart, the 200 SMA is declining and currently at 0.8630, down from the previous hour close at 0.8637. On average, the exponential closing price for the past 20 days is 0.8545, with the trend indicating a continuation higher ahead.

How volatile has EUR/GBP been?

Hourly 2-Standard Deviation Volatility Bandwidth is currently 38 pips, and has been expanding, while the ATR (14) is currently 15 pips. Daily 2-Standard Deviation Volatility Bandwidth is at 430 pips and expanding. The average movement for the current hour has been for 15 pips per hour, over the last four weeks. Meanwhile, 8:00-9:00 GMT represented peak for volatility, with an average movement of 33 pips over the same period.

What price levels and patterns have to be considered?

Immediate resistance ahead is seen at 0.8609 (Yesterday's Low), 0.8613 (Hourly 20 EMA), 0.8617 (Weekly Low) and 0.8617 (Daily Open). Next support to the downside can be found at 0.8586 (Daily Low), 0.8572 (Daily Classic S2), 0.8545 (Daily 20 SMA) and 0.8536 (Daily Classic S3).

Looking at price patterns, we can see a Dark Cloud Cover 4-hour candlestick formation.