Missed the trend line breakout on EUR/GBP?
The pair could still be gearing up for a quick retest before gaining traction on this potential long-term reversal.
Take a look at these nearby correction levels on the 4-hour time frame:
EUR/GBP 4-hour Forex Chart by TradingView
After cruising below a descending trend line for more than a month, EUR/GBP finally busted through the falling resistance zone to suggest that a reversal may be in order.
As it turned out, last week’s U.S. federal court ruling that Trump’s “Liberation Day” tariffs were illegal led euro bulls to charge on expectations that the higher trade levies on European products would be lifted.
Can the shared currency sustain the recovery though?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
EUR/GBP’s breakout rally hit a ceiling around the .8450 minor psychological mark, spurring a pullback to the 38.2% Fibonacci retracement level, which appears to be keeping losses in check so far.
A larger correction could still dip to the 50% Fib just slightly below the pivot point level (.8410) and another psychological handle at .8400. Keep your eyes peeled for reversal candlesticks that could hint at a possible bounce back to the swing high or R1 (.8460) then to R2 (.8490) if bullish vibes stay in play.
The line in the sand for a pullback could be the 61.8% level close to the former trend line at .8392, as a break below this could allow the downtrend to resume to the swing low likely depending on how the upcoming ECB decision turns out.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
