EUR/GBP Price Analysis: Bounces off the lower channel line and continues modest gains

  • The EUR/GBP has bounced after touching the lower line of the ascending channel.
  • The chart suggests a moderate bullish bias as the price slowly moves higher.

EUR/GBP bounces off the lower line of the ascending channel and rises.

The price continues to respect the confines of the recovery channel that began at the lows of August 30. It is slowly moving higher, suggesting that a new short-term uptrend is taking root.

EUR/GBP 4-hour chart

The Moving Average Convergence/Divergence (MACD) momentum indicator remains above the zero line, indicating a slight bullish bias in price dynamics.

A close above the high of 0.8464 (September 11 high) would be required to confirm an upside break of the channel. Such a move would likely reach around 0.8477, the Fibonacci (Fib) extension of 0.618 if the channel height is extrapolated upwards.

Bullish signals now marginally outweigh the bearish ones. First, EUR/GBP continues to rise within a bullish channel, second, it has broken through the previous descending channel, and finally, the exhaustion break during August (orange shaded circle) – when it accelerated lower – is a bullish reversal signal.

The main bearish signal is the relatively shallow ascending channel compared to the much more pronounced previous bearish move.

A close below 0.8423 (September 10 low) would pave the way for further weakness towards a downside target at 0.8406, the 0.618 Fibonacci extension on the downside.

Source: Fx Street

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