EUR/GBP is extending a shallow ascending recovery channel that began at the August 30 lows. The overall short-term trend is unclear – both positive and negative signs complicate the picture. 

EUR/GBP 4-hour Chart 

(Click on image to enlarge)

EUR/GBP continues respecting the guard rails of the channel and in the absence of a breakout in either direction the it will probably continue climbing steadily higher. 

A close above the 0.8464 high (September 11 high) would be required to confirm an upside breakout from the channel. Such a move could be expected to reach roughly 0.8477, the 0.618 Fibonacci (Fib) extension if the height of the channel extrapolated higher. 

Alternatively a close below 0.8423 (September 10 low) would pave the way for further weakness to a downside target at 0.8406, the 0.618 Fib extension lower. 

Bullish signs are that price is in a rising channel, that it has broken all the way through the previous falling channel and the exhaustion break during August (orange shaded circle) when it accelerated to the downside, which is a reversal sign. 

The main bearish sign is the relative shallowness of the rising channel in comparison to the much steeper previous bear move. 

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