- EUR/GBP has sold-off back down to the lows of its short-term range.
- It is probably in a sideways trend and is likely to encounter stubborn support at the range lows.
EUR/GBP declines all the way back down to the base of its six-week range (red dashed line on chart) at roughly 0.8311; it is likely to encounter firm support at the level.
EUR/GBP 4-hour Chart
The pair is probably in a short-term sideways trend and given the technical analysis principle that “the trend is your friend” the odds favor an extension of this range-bound price action.
Therefore, if EUR/GBP stops selling off at the range floor and starts to bounce higher it would confirm that the sideways trend was extending. That said, price has not slowed its descent yet, is still pushing lower and showing no signs of a bounce.
If the bearish behavior continues and EUR/GBP breaks decisively below the 0.8311 floor, it would suggest the medium and long-term downtrends were reasserting themselves, and the pair was likely to fall further. However, it should be noted these levels represent over two-year lows for the pair.
Nevertheless, a clean break below them, by a longer-than-average daily candlestick below the 0.8311 lows, or perhaps by three consecutive red candles, would confirm a decisive breakdown. Such a move would probably then lead to a sell-off to around the 0.8240 level, this being the 61.8% Fibonacci extension of the height of the range extrapolated lower.
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