EUR/GBP Price Analysis: Falling within a shallow ascending channel

• EUR/GBP is falling within 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 falling within a shallow ascending recovery channel that started at the lows of August 30 and the overall short-term trend is unclear.

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

EUR/GBP 4-hour chart

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

The medium-term trend is likely to remain bearish, however, suggesting a risk of the price breaking lower.

A break below 0.8406 (low Sep 3) would pave the way for further weakness towards a downside target of 0.8385 (low Jul 17).

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

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