The EURGBP pair looks braced for more upside as sentiment and the technicals continue to suggest that the upside is not done on this cross-pair yet and further gains lay ahead.
It is also a fact that the EURGBP pair is in a bull trend again and has been trading above its 200-day moving average for the past few weeks, meaning that bulls are currently in control over the short and medium term.
Sentiment metrics are highly suggesting that a breakout is imminent as the majority of traders are stacked short against the EURGBP pair. But more on this later.
In terms of the technical, bullish patterns abound, and continue to allude to the fact that a rally towards the 0.9000 level could happen at any time for the typically slow-moving EURGBP pair.
Another concern would be the Bank of England continues to hike rates to fight inflation and the ECB stays put. However, this does not mean a short-term price bounce cannot happen.
The ActivTrader platform shows that bearish sentiment is rising, with some 75 percent of traders now expecting more upside in the EURGBP pair despite the recent big drop from the 0.9300 level.
Overall, this is very bullish for the EURGBP pair because traders are typically on the wrong side of the trade. Most of the time fading retail sentiment works well for trading purposes.
EURGBP Short-term Technical Analysis
The four-hour time frame shows that the EURGBP pair is technically bullish over the short-term with the price trading slightly above its key 200-period moving average, around the 0.87100 area.
Looking at bullish patterns, an inverted head and shoulders pattern has formed. This could hint at a restest of that 0.9000 very important technical area.
EURGBP Medium-term Technical Analysis
The daily time frame shows that the EURGBP pair has recently made a new multi-year higher high after igniting a large, inverted head and shoulders price pattern.
According to the overall size of the bullish price pattern the EURGBP pair has already met its full target and could be in the process of forming a much-large, inverted head and shoulders pattern.