EUR/GBP technical analysis: downside may extend towards 0.8800
20:07, 10 July 2020
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The euro has been under constant selling pressure against the British pound over recent days, as the bearish reversal from the 0.9175 level gathers pace.
EUR/GBP technical analysis shows that the bearish reversal could target the 0.8800 level at a minimum.
EUR/GBP medium-term price trend
The EUR/GBP pair has broken under the 0.9000 support level, as the British pound continues to gain ground against the euro.
EUR/GBP analysis shows that a significant bearish trendline breakout has taken place on the daily time frame.
The rising trendline on the daily time frame is found by attaching the February monthly low to the May monthly low, and is located around the 0.9030 level.
Since the breach of the trendline, the downside in the EUR/GBP pair has started to accelerate.
Bears could target the 0.8800 level, and possibly the EUR/GBP pair’s 200-day moving average, around the 0.8700 level.
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EUR/GBP short-term price trend
EUR/GBP technical analysis shows that the pair has a bearish bias over the short term while the price trades below the 0.9000 level.
The four-hour time frame currently shows that a head-and-shoulders pattern has recently formed, following the strong rejection from the 0.9175 level.
Looking more closely at the bearish reversal pattern, the breakout area, or neckline, is located around the 0.9000 level.
According to the size of the head-and-shoulders pattern, the EUR/GBP pair could decline by around 175 points.
Traders are likely to use any moves back above the 0.9000 as a selling opportunity, in expectation of further downside.
EUR/GBP technical summary
EUR/GBP analysis suggests that a medium-term top is now in place. Losses below under the 0.9000 level should accelerate technical selling towards the 0.8800 level.