EUR/GBP Price Analysis: Back inside the multi-month range

EUR/GBP is trading back inside its multi-month range after forming five down days in a row. The range stretches from roughly a ceiling level at 0.8600 and a floor at 0.8530. 

EUR/GBP Daily Chart 

EUR/GBP has fallen to 0.8541, which is quite close to the range floor at 0.8530. At the level of the range floor it is likely to encounter relatively tough support, and will probably bounce, at the very least temporarily. 

A decisive break below the range low would open the way for more downside to the next target lower at 0.8486. This is the 0.681 Fibonacci ratio of the height of the range extrapolated down from the channel’s base, the method used by technical analysts to estimate range breakouts. Further weakness could even see price match the target at 0.8460. 

EUR/GBP broke out of the top of its multi-month consolidation range on April 19 and rose up to a peak of 0.8645 before forming a Tweezer Top candlestick reversal pattern at the highs, reversing and tumbling back down. The Tweezer Top forms when two adjacent candlesticks peak, their wicks are of similar length, and end at the same or very similar levels. 

The pair then declined rapidly, breaking back inside the range and is now on its way to the range lows. 

EUR/GBP is in a sideways trend which is forecast to continue until a directional bias proves otherwise. 

The Moving Average Convergence Divergence (MACD) indicator has just crossed below its signal line, giving a sell signal and indicating more downside. The signal is improved by the fact the pair is in a sideways trend and MACD is proven to be a more reliable indicator in non-trending markets.