- EUR/GBP has slowed its decline and is consolidating after forming a temporary bottom.
- The trend remains bearish, however, there are signs the bear trend may be exhausted and about to reverse.
EUR/GBP has paused its sell-off within a falling channel. The pair temporarily broke below the bottom of the channel (shaded circle) before recovering and consolidating. This break may be a sign of exhaustion and the first faint signs of a reversal higher, however, it is too soon to tell.
EUR/GBP 4-hour Chart
So far, the recovery has been quite shallow and it is currently capped by resistance from the 50-period Simple Moving Average (SMA). Price would need to break decisively above the SMA and the line of highs at 0.8435 to provide a stronger bullish signal. Such a move would be expected to extend to the upper channel line at roughly 0.8450 where it would probably encounter reasonably tough resistance. A decisive break would be accompanied by a long green candle that closed near its high or three green candles in a row.
The short-term trend remains bearish, however, suggesting the odds continue to favor an extension lower. A break below 0.8406 (September 3 low) would pave the way for further weakness to a downside target at 0.8385 (July 17 lows).
The long-term trend (weekly chart) is still bearish whilst the medium-term trend is bullish
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