- EUR/GBP is correcting in a medium-term downtrend.
- It has moved up to partially fill a price gap and will probably eventually fill the rest.
- A break below the June 25 low would signal a resumption of the dominant downtrend.
EUR/GBP has corrected back after bottoming on June 14 at the 0.8398 lows.
The pair appears to be in a medium-term downtrend which, given “the trend is your friend” is likely to resume once the pull-back runs out of steam. A break below 0.8431 (June 25 low) would signal such a resumption.
EUR/GBP Daily Chart
The initial target for a move down would be the 0.8399 June 14 low.
The correction may still pull higher, however, as it has pulled all the way up to a gap (red shaded area). Gaps are normally filled eventually and there is, therefore, a risk of more upside evolving as price fills this gap.
EUR/GBP 4-hour Chart
The top and bottom points of price gaps tend to represent support and resistance levels for price. As such, if price does fill the gap and reaches the top at 0.8490 there is a chance it could stall and roll over.
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