EUR/GBP technical analysis: Head-and-shoulders breakdown likely
|- EUR/GBP's 4-hour chart shows a head-and-shoulders pattern.
- A breakdown would create room for a drop to 0.8857.
EUR/GBP has created a head-and-shoulders bearish reversal pattern on the 4-hour chart with neckline support at 0.8954.
A 4-hour close below that level would confirm breakdown and open the doors to 0.8857 (target as per the measured move method).
The head-and-shoulders breakdown looks likely, as signs of bullish exhaustion have emerged on longer duration charts. For instance, the weekly chart shows multiple candles with long upper wicks, marking failure to keep gains near/above 0.90.
Further, the daily MACD histogram has turned bearish and the weekly MACD indicates the bullish momentum has weakened over the last four weeks.
The case for a head-and-shoulders breakdown would weaken if the pair rises above 0.9005, invalidating lower highs pattern on the 4-hour chart. As of writing, the pair is trading at 0.8965.
4-hour chart
Trend: Bearish
Pivot points
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.