EUR/GBP Technical Analysis: Will the Dominant Downtrend Resume?
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EUR/GBP Technical Analysis
- EUR/GBP extends near-term uptrend after bullish reversal warning signal
- On the 4-hour chart, prices attempting to resume the dominant downtrend
- Closes to the downside required before arguing the pair may keep falling
Previously, I highlighted a bullish reversal signal in EUR/GBP which resulted in the pair climbing over 1% before trimming gains to about 0.3%. On the daily chart below, the lower range of horizontal resistance held at 0.88108 which further reinforced this area. Prices then fell through the next area of interest at 0.87637.
From here, near-term support appears to be at 0.87234 which is the October 10 low. A descent through it exposes a horizontal range of support between 0.86983 and 0.86683. The reason I am highlighting these support levels is because of what is brewing on the 4-hour chart.
EUR/GBP Daily Chart
EUR/GBP 4-Hour Chart
Zooming in on the chart below, the Euro has descended through the near-term rising support line against the British Pound. Since then, prices rebounded just above 0.87234 to close just below 0.87637 (support levels mentioned above).
The close under the trend line will require further confirmation to argue that EUR/GBP could be heading lower next. This could be the case if on the daily chart, the pair ends a day under 0.87234. Otherwise, the bullish reversal highlighted last could remain in play guiding EUR/GBP to the upside.
You may follow me at @ddubrovskyFX for more timely updates should the pair make active moves in the interim.
**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.