Eurgbp At Risk Of Downtrend

Eurgbp At Risk Of Downtrend by Andrew Blumer last updated on July 18, 2024

Eur/Gbp At Risk Of Resuming Downtrend

According to currency experts, the EUR/GBP is at a greater risk of resuming its downtrend once again. This comes as the EUR/GBP has retreated after staging a recovery from the June lows.

The technical chart of the EUR/GBP pair shows that it has created a candlestick reversal pattern known as two bars. This is a sign of strong bearish momentum and could send the EUR/GBP lower once again.

Two Bar Pattern Signals Bearish Trend

The two-bar pattern usually appears once the price has peaked and is characterized by a green candle followed by a red candle of the same size and shape. The two-bar pattern in the EUR/GBP was also confirmed by the formation of a bearish candle immediately after it.

Another sign that the downtrend might be resuming in the EUR/GBP is that the pair has already filled its price gap visible on the H4 and above charts.

Normally, price tends to be drawn towards the gap area as the markets try to fill the gap. Now that the EUR/GBP has filled its gap, it is now at a greater risk of more downside. Once the EUR/GBP breaks the 0.8460 support zone, it will further reinforce a bearish narrative for the pair.

If we look at the fundamental side, the UK is done with the elections, and the opposition party has won with a huge majority. However, the same can't be said about France, where no party has secured any major victory & will likely lead to run-off elections.

So even from the fundamental side, the EUR/GBP is at risk of downside with the next target at 0.8460 and then 0.8400 level.

But if the EUR/GBP can recover and reclaim the 0.8500 resistance, it will push it toward 0.8517, where the 50 SMA is located.

In the short to medium term, the trend of the EUR/GBP will likely be bearish based on the fundamental and technical analysis.