- EUR/GBP has met support at the floor of a five-week range.
- It will probably recover as the pair extends its range sideways.
EUR/GBP has fallen down to the base of its six-week range (red dashed line on chart) at roughly 0.8311; it is likely encountering firm support at that level.
EUR/GBP 4-hour Chart
The pair is probably in a sideways trend on a short-term basis and given the technical analysis maxim that “the trend is your friend” the odds favor an extension of this range-bound price action.
As such, EUR/GBP will probably bounce off the range floor and start to rise back up within the range thereby extending the sideways trend.
If EUR/GBP breaks decisively below the 0.8311 floor, however, it would suggest the medium and long-term downtrends were reasserting themselves.
A longer-than-average daily candlestick below the 0.8311 lows, or perhaps three consecutive red candles that break below the level, would confirm a decisive breakdown. Such a move would probably lead to a sell-off to around the 0.8240 level, this being the 61.8% Fibonacci extension of the height of the range extrapolated lower.
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