- EUR/GBP has risen and filled the price gap that was open between 0.8472 and 0.8490.
- There is a chance it may have completed its upside correction now and the downtrend could resume.
- A break below the June 28 low would help confirm a resumption lower.
EUR/GBP continues correcting back after bottoming at the 0.8398 June 14 lows. It has now filled a price gap on the charts (red shaded area) increasing the odds the correction may be near to completion.
EUR/GBP Daily Chart
Given the pair appears to be in a medium-term downtrend and “the trend is your friend” it will probably resume moving lower once the pull-back runs out of steam. A break below 0.8447 (June 28 low) would help confirm such a resumption.
The initial target for a move lower would be the 0.8399 June 14 low.
EUR/GBP 4-hour Chart
The Relative Strength Index (RSI) on the 4-hour chart has exited overbought, further suggesting the correction may have run its course and be turning lower. When RSI exits overbought in a countertrend move such as that on EUR/GBP, it is often a reliable indicator the main trend is resuming.
Alternatively, a break above the 0.8499 highs would indicate a continuation of the correction higher, with the 50-day Simple Moving Average at 0.8517 providing the next resistance target to the upside.
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