This forex pair has been cruising lower inside a falling channel on its 4-hour time frame, and it looks like another test of support is taking place.
Will it bounce or break this time?
Check out these near-term inflection points I’m watching:
EUR/GBP 4-hour Forex Chart by TradingView
A combination of dovish ECB rhetoric and political uncertainty have been weighing on the euro in the past weeks, keeping EUR/GBP inside a descending trend channel since mid-September.
On the flip side, sterling has enjoyed some support from improving inflation figures and relatively lower odds of yet another Bank of England (BOE) rate cut soon.
Earlier this week, the threat of a no-confidence vote on French PM Barnier and downgrades to eurozone November PMI readings dragged the pair from its mid-channel area of interest back down to the bottom.
Will support still hold?
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 euro and British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The floor near S1 (.8280) still seems to be holding, possibly attracting enough bullish energy to lift EUR/GBP back up to the middle of the channel near the pivot point (.8320) and the moving averages.
Sustained upside momentum could even take it all the way to the resistance zone at the top of the channel and R3 (.8410) near a major psychological mark.
On the other hand, a break below the channel bottom and S2 (.8260) could set off an even steeper slide for the pair, especially if political instability worsens in France.
As always, watch out for other top-tier catalysts that could impact overall market sentiment, and make sure you practice proper position sizing when taking any trades!