The EUR/GBP printed a four-month low of 0.8723 earlier this month and faces a risk of a deeper drop if a key trendline connecting April 2017 and April 2018 low is breached.
At press time, the EUR/GBP pair is trading at 0.88 and the trendline support is seen at 0.8784.
Monthly chart
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The currency pair has charted a lower high pattern on the monthly chart, as it declined from the August high of 0.9099 to 0.8723, adding credence to the bearish divergence of the relative strength index (RSI), confirmed in August-September 2017.
The 5-month and 10-month exponential moving averages (EMAs) are beginning to roll over in favor of the bears.
Further, the MACD continues to call a bearish move.
So, it seems safe to say that the stage is set for a deeper drop toward the ascending 50-month EMA, currently located at 0.8473.
The prospects of a slide toward 0.8473 would rise further if the pair finds acceptance below 0.8784, confirming a downside break of the symmetrical breakdown or the bullish-to-bearish trend change, first called by the bearish divergence of the RSI in August-September last year.
R1: 0.8851 (200-day EMA)
R2: 0.8996 (Sept. 21 high)
R3: 0.9065 (symmetrical triangle hurdle or trendline connecting August 2017 high and August 2018 high)
R4: 0.9099 (August high)
R5: 0.9306 (August 2017 high)
Support
S1: 0.8794 (symmetrical triangle support)
S2: 0.8710 (100-week EMA)
S3: 0.8621 (April 2018 low)
S4: 0.8498 (200-week EMA)
S5: 0.8473 (50-month EMA)
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