It falls into the shallow ascending channel

• EUR/GBP is falling in an ascending channel that has been rising since late August.
• The short-term trend is unclear, although the price continues to respect the limits of the channel.

EUR/GBP is in an ascending shallow recovery channel that started at the August 30 lows, and the overall short-term trend is unclear.

The pair recently touched the top of the channel before pulling back to the 50-period simple moving average (SMA).

EUR/GBP 4-hour chart

EUR/GBP respects the protective channel rails and is likely to find support at the lower channel line around 0.8420 before turning higher again and extending the channel steadily higher.

However, the medium-term trend is likely still bearish, suggesting a risk for the price to decline.

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 break above the 50-period SMA was a bullish sign, as was the break from the descending channel in August (shaded orange circle) when it accelerated to the downside. This could have been an exhaustion break. If so, it would be a bullish sign as these patterns usually occur at the end of trends and are a sign of a reversal.

A clear break above the top of the shallow rising channel at around 0.8455 would be needed to confirm a bullish reversal. Such a move could be expected to reach 0.8470-80 as the initial target area.