EUR/GBP has been cruising higher inside an ascending channel on its 4-hour chart, and it looks like another correction is due.
Check out these pullback zones I’m watching!
EUR/GBP 4-hour Forex Chart by TradingView
This euro pair has been on a steady climb in the past month, as European Central Bank officials have stressed their “wait and see” stance as opposed to the Bank of England’s relatively dovish bias.
Expectations of an August BOE cut, combined with the sharp decline in U.K. gilts earlier this week, boosted EUR/GBP to the top of its ascending channel, which is holding as a ceiling so far.
Will the 38.2% Fib retracement be enough to attract more buyers?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
A deeper correction could still drag EUR/GBP down to the 50% correction level near the .8600 major psychological mark or the 61.8% Fib near R1 (.8580), so keep your eyes peeled for reversal candlesticks that could point to a continuation of the climb.
If that happens, a return in bullish momentum could take the pair back up to the swing high near the channel top and R4 (.8680). Note that the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are more likely to hold than to break.
Sustained downside pressure, on the other hand, could bring EUR/GBP all the way down to the channel bottom close to the pivot point level (.8540) and the 100 SMA dynamic inflection point.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
