EUR/GBP Price Analysis: Sell-off Pauses and Consolidates

• EUR/GBP has halted its decline and is consolidating after forming a temporary bottom.
• The trend remains bearish, however, there are signs that the downtrend may be exhausted and about to reverse.

The EUR/GBP has paused its sell-off inside a descending channel. The pair temporarily broke below the channel bottom (shaded circle) before recovering and consolidating. This breakout may be a sign of exhaustion and the first weak signs of an upside reversal, however, it is too early to tell.

EUR/GBP 4-hour chart

So far, the recovery has been rather shallow and is currently capped by resistance from the 50-period simple moving average (SMA). The price would need to decisively break above the SMA and the high line at 0.8435 to provide a stronger bullish signal. Such a move would be expected to extend to the upper channel line at around 0.8450, where it would likely encounter reasonably strong resistance. A decisive breakout would be accompanied by a long green candle closing near its high or three consecutive green candles.

The short-term trend remains bearish, however, suggesting that the odds continue to favor a downside extension. 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 long-term trend (weekly chart) remains bearish while the medium-term trend is bullish.