EUR/GBP continues descending within a falling channel, clearly visible on the 4-hour chart below.
EUR/GBP has fallen to a cluster of support at the level of the lower trendline of its falling channel. There is a good chance the pair could find its feet and recover from this key technical level. The declining sequence of peaks and troughs supposes the pair is in a short-term downtrend, and given “the trend is your friend” this biases prices to further weakness.
EUR/GBP is also testing both the 200-period Simple Moving Average and the 0.618 Fibonacci retracement level of the late-June and early-August rally at 0.8478. On the daily chart it is also testing the key 50-day SMA. This confluence of support further increases the probability of a recovery unfolding. The price itself is forming what might end up as a bullish Hammer Japanese candlestick reversal pattern on the current 4-hour bar, however, until the period ends it is not possible to be certain.
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