EUR/GBP has been cruising below a falling trend line on its 4-hour time frame and looks ready to test this area of interest again.
Can it hold as a ceiling?
Or are we about to see a major reversal this time?
EUR/GBP 4-hour Chart Faster With TradingView
The Bank of England’s (BOE) “hawkish cut” back in December, followed by mostly upbeat U.K. data earlier this year, gave this pair enough energy to break below the floor around the .8660 area.
Meanwhile, the euro has been struggling under the weight of tariffs uncertainty stemming from the Greenland drama in January.
The pair is taking a breather from its dive and looks ready to retest the former support. Where will the upcoming BOE statement and ECB decision take this next?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
EUR/GBP is closing in on the 38.2% Fibonacci retracement level, which coincides neatly with the broken .8660 support that could now hold as resistance.
A larger correction could reach the 50% level that lines up with the pivot point (.8670) or the 61.8% Fib closer to the descending trend line and R1 (.8700), which could be the line in the sand for a bearish pullback.
Keep your eyes peeled for a break above the resistance zone, which could suggest that a reversal is in the cards, potentially lifting EUR/GBP to the next upside targets at R2 (.8740) then R3 (.8770).
On the other hand, reversal candlesticks at the technical confluence zone could point to a continuation of the downtrend to the support levels at S1 (.8630) and swing low near S2 (.8610).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
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