EUR/GBP Price Analysis: Trades lower and continues to oscillate within a range

• The price of EUR/GBP has just reversed lower after rising to near range highs.
• The sideways trend is likely to extend, with the price oscillating within the range.
• EUR/GBP is finding support in a group of moving averages in the 0.8560 area.

He EUR/GBP It is trading at 0.8560, in the middle of a range of several months. She moved lower after rising to near the top of the range.

The pair is in a sideways trend that is expected to extend given the old traders' adage that “the trend is your friend.”

EUR/GBP 4-hour chart

After rising and almost hitting the top of the range on Friday, EUR/GBP has reversed and fallen to a cluster of MAs at 0.8565, where it has temporarily found support. If the pair manages to decisively break below this group of MAs, which is made up of the 50, 100 and 200 simple moving averages (SMA), it will likely fall back to the support at 0.8530.

The Moving Average Convergence Divergence (MACD) indicator has moved above the zero line, a bullish signal, however it is turning bearish. If it crosses below the red signal line, it will give a sell signal and suggest further declines for EUR/GBP. The signal would be reinforced by the fact that the pair was in a sideways trend and the MACD has proven to be a more reliable indicator in non-trending markets.

Change of trend?

For a sideways trend reversal to be confirmed, the EUR/GBP pair would need to break above or below the range.

In the event of a break below the range floor, such a move would open the way for further decline to the next target at 0.8486 – the 0.681 Fibonacci ratio of the range height extrapolated downward from the channel base. This is the method used by technical analysts to estimate range breaks. Further weakness could even lead the price to reach the next target at 0.8460, the full height of the downside extrapolated range (1.000).

Similarly, a decisive break above the range high at 0.8595 would signal a breakout with an initial target at 0.8635 followed by highs at 0.8645.

A decisive breakout would be characterized by a long candlestick breaking completely above or below the range floor and closing near its high or low, or three consecutive red candles clearly breaking through the level.