EUR/GBP Price Analysis: Selling Breaks and Consolidates

• EUR/GBP has slowed its decline and is consolidating after forming a temporary low.
• The trend remains bearish, however, there are signs that the bearish trend may be exhausted and about to reverse.

EUR/GBP has stopped selling in a descending channel. The pair temporarily broke below the channel bottom (shaded circle) before recovering and consolidating. This pause may be a sign of exhaustion and the first faint signs of a larger reversal, however, it is too early to tell.

EUR/GBP 4-hour chart

The recovery has been quite shallow so far and is currently covered by the 50-period simple moving average (SMA) resistance. The price should decline decisively above the SMA and the line of highs at 0.8435 to provide a stronger bullish signal. Such a move would be expected to extend to the upper channel line at around 0.8450, where it would likely meet with quite stiff resistance. A decisive break would be accompanied by a long green candle closing near its high or three green candles in a row.

The near-term trend remains bearish, however, suggesting the odds continue to favor a lower extension. A break below 0.8406 (September 3 low) would pave the way for further weakness towards a downside target at 0.8385 (July 17 low).

The long-term trend (weekly chart) is still bearish, while the medium-term trend is bullish