The EURGBP pair is under heavy selling pressure back towards its yearly low as broad based euro weakness causes the traditionally slow-moving currency pair looks set to break much lower.
A big disparity has started to emerge between the EURUSD and GBPUSD pairs this week. With the EURUSD breaking to new lows and the GBPUSD pair holding critical support, selling pressure is being placed on the EURGBP pair.
More selling is likely over the coming days as the freefall in the EURUSD pair looks set to accelerate and worsen. If the GBPUSD pair continues to hold above the 1.3400 level and the euro’s slide continues, then expect more EURGBP selling.
The technicals clearly show that failure to bounce from current levels is likely to sink the EURGBP pair back towards the 0.8200 level. Price pattern analysis highlights that a large triangle pattern breakout is currently in play.
Interesting, a large broadening expanding wedge pattern is also pointing towards the 0.8000 level as a very likely possibility, although it is noteworthy that this target is some 400 points away.
The ActivTrader platform shows that bullish sentiment is ramping up, with some 88 percent of traders still expecting more upside in the EURGBP pair. One-way sentiment skews are rarely correct, so the current bullish sentiment is worrying.
With traders wholesale bullish towards the euro crosses, while they continue to slump, I have concerns that the sell-off in the single currency is only set to worsen.
EURGBP Short-term Technical Analysis
The four-hour time frame shows that the EURGBP pair is currently technically bearish over the short-term while the price trades below the 0.84000 support level.
Lower time frame analysis currently shows the EURGBP pair has broken under a large triangle pattern. Sustained weakness under the 0.8500 level is likely to prompt huge losses towards the 0.8200 level.
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EURGBP Medium-term Technical Analysis
The daily time frame shows that the EURGBP pair has suffered a large technical rejection from the top of large expanding broadening wedge pattern.
Following the upside failure, the big picture is most likely front running a big drop-off towards the bottom of the channel. These types of channel patterns typically see trading action between the upper and lower trendlines.
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