The EUR/GBP pair experienced a sharp decline in August, but it seems to have reached a bottom and is now consolidating. While the overall trend is still bearish, there are indications that the bears may be running out of steam, signaling a possible reversal in the near future.
After breaking out of its falling channel in August, EUR/GBP has now stabilized and entered a sideways trading range. The recent recovery has been limited, with resistance from the 50-period Simple Moving Average (SMA) preventing a decisive breakout above key levels.
The pair is likely to continue trading sideways until it hits resistance around 0.8450, at the upper channel line. Although the medium-term trend remains bearish, the exhaustion break from the channel suggests a lower probability of further downside extension.
However, a break below the recent low of 0.8406 could open the door for a move towards 0.8385. To reverse the short-term trend, bulls need to break decisively above the 50 SMA with strong bullish momentum.
On the weekly chart, the long-term trend remains bearish, while the medium-term trend is showing signs of turning bullish. Traders should keep a close eye on key levels and technical indicators for potential trading opportunities in the EUR/GBP pair.
EUR/GBP 4-hour Chart
Overall, the EUR/GBP pair is at a critical juncture, with the potential for a trend reversal in the near future. Traders should exercise caution and closely monitor price action for confirmation of a new trend direction. Stay tuned for updates on this developing situation in the forex markets.