EURGBP has been carving out a descending triangle pattern on the short-term time frame, with a series of lower highs pressing down toward a flat horizontal support floor around the 0.8620 level.
Price recently dipped to test this support zone and appears to be staging a bounce, raising the question of whether another run at the descending resistance is in the cards.
If the bounce gains momentum, EURGBP could work its way back up toward the descending trendline resistance, which is currently sliding in around the 0.8700 major psychological area. A break above that ceiling would be a significant development, potentially signaling that the pair is ready to flip the broader bearish structure and push toward the swing highs near 0.8750 or higher.
On the other hand, a failure to sustain the recovery and a break below the 0.8620 support floor would confirm the descending triangle breakdown, opening the door to a measured move lower by roughly the height of the formation. This could put the 0.8550 minor psychological area or lower in focus for bears.
The moving averages are still telling a bearish story, with the 100 SMA crossing below the 200 SMA to confirm that the path of least resistance remains to the downside. Both indicators are also hovering above current price, reinforcing their role as dynamic resistance on any relief rally.
That said, stochastic has shot up sharply from the oversold region and is now approaching overbought territory, reflecting strong near-term buying pressure. A turn lower from here, however, could signal fading bullish momentum before the pair reaches meaningful resistance.
RSI is also trending higher with plenty of room left before hitting overbought levels, suggesting that buyers could keep pushing in the short term. EURGBP is likely to take directional cues from ECB commentary and BOE officials’ remarks, which could add fuel to either side of the trade.
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