Is this pair just gathering more bearish energy to sustain its reversal?
Price recently fell through the neckline of a double top pattern to suggest that a downtrend of the same height as the formation is due.
Check out EUR/GBP hanging out at this support-turned-resistance zone on the 4-hour time frame!
EUR/GBP 4-hour Forex Chart by TradingView
Trade uncertainty stemming from EU-U.S. tariffs negotiations, combined with a surprise BOE “hawkish cut” in their latest decision, forced EUR/GBP to retreat from its climb and signal a potential reversal.
The pair already fell through its double top neckline around the .8650 minor psychological mark and has since pulled up for a quick retest of the pivot point level (.8630) near the 38.2% Fib.
Can it resume the selloff from here?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the euro and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Sterling direction could hinge on the upcoming U.K. CPI report, as the outcome could tip the scales in favor of either the hawks or the doves in the central bank. In particular, stronger than expected inflation could dampen expectations of further easing, possibly dragging EUR/GBP further south.
Keep an eye out for a continuation of the drop to the next bearish targets at S1 (.8600) at the swing low then S2 (.8560) or all the way down to S3 (.8520) close to last month’s lows.
A larger pullback could still take the pair up to the 50% Fib near R1 (.8670) or the 61.8% level just below the .8700 major psychological mark, but a break above this could clear the way for a rally back to the August highs near R3 (.8750).
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.
