EUR/GBP Technical Analysis: Corrective Downtrend Pause in Store?
EUR/GBP Technical Analysis
- EUR/GBP on the verge of following through on bearish continuation pattern
- More declines ahead may lead prices testing the current 2018 low at 0.8620
- Ebbing downside momentum on 4H EUR/GBP chart warns near-term reversal
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Last week, I pointed out a quite rare falling three method bearish continuation pattern on the EUR/GBP weekly chart. This warned that the pair was about to resume its downtrend from late August following a false breakout above a descending resistance line from then. This was indeed the case and EUR/GBP is now on the verge of closing at its lowest since the middle of April when looking at the weekly chart below.
Not only that, but achieving another close under the pattern at the end of November 9th would confirm follow through. Such an outcome would suggest that the British Pound could have more room to carve out gains against the Euro. With that in mind, let us zoom in on the daily chart to see where prices may go next in the medium and short-term.
EUR/GBP Weekly Chart
EUR/GBP closed under the October 10th low at 0.87237 which also aligns with minimums achieved back in June, effectively exposing the next range of support. This is between 0.86976 and 0.8680 which contains the lows reached back in December 2017 and during the first half of 2018. Prices are sitting squarely on top of this support range and a fall under exposes the current 2018 low at 0.8620.
EUR/GBP Daily Chart
Looking at the 4-hour chart does reveal positive RSI divergence which shows that downside momentum is ebbing. This hints that in the near-term, we may see EUR/GBP climb. But the pair would have to rise above the descending trend line from August in order to have another go at overturning the dominant downtrend.
EUR/GBP 4-Hour Chart
**Charts created in TradingView
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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.