Growth in a shallow recovery channel

• EUR/GBP has been rising in a shallow channel since bottoming out in late August.
• The trend is now likely sideways – possibly even bullish, with odds favoring more upside and a reversal.

EUR/GBP continues to steadily recover in a shallow channel. The dominant short-term downtrend since August ended and the pair entered a sideways trend. It may even be at the start of an uptrend.

EUR/GBP 4-hour chart

EUR/GBP is likely to continue its shallow uptrend channel higher. An upward acceleration and a decisive break above the upper channel line could lead to a move up to a target of 0.8468. The odds are probably marginally in favor of more advantages now. A decisive break would be one accompanied by a long green candle that breaks above the level and closes close to the highest or three green candles in a row.

The Relative Strength Index (RSI) momentum indicator is rising in line with price, indicating mild bullish confidence.

It is still possible for the August downtrend to resume, with a decisive break below the lower channel line, likely leading to a decline to the 0.8400 target.

The pair was falling into a descending channel during August. The downtrend accelerated and temporarily broke out of the bottom of the channel – a sign of exhaustion. After hitting rock bottom, it began a shallow recovery that continues to evolve.