EUR/GBP technical analysis: Head-and-shoulders breakdown confirmed

EUR/GBP's 4-hour chart shows a head-and-shoulders breakdown.
The pair may revisit the neckline resistance before falling to 0.8857.

Omkar Godbole FXStreet Contributor

EUR/GBP looks south with the hourly chart reporting a head-and-shoulders breakdown, a bearish reversal pattern.

The breakdown has created room for a drop to 0.8857 (target as per the measured move method).

Supporting the bearish case is the 14-day relative strength index (RSI), which is now flashing bearish conditions with a below-50 print.

Further, the moving average convergence divergence (MACD) histogram is losing altitude below the zero line, a sign the bearish momentum is gaining strength.

That said, the pair may revisit the former support-turned-resistance of the head-and-shoulders neckline of 0.8954 before falling towards 0.8857, as the hourly chart RSI has bounced from oversold (below 30) levels.

The bearish case would be invalidated if the pair closes today above 0.8968.

4-hour chart

Trend: Bearish

Pivot points

1. R3 0.9025
2. R2 0.8998
3. R1 0.896
PP 0.8933
1. S1 0.8895
2. S2 0.8868
3. S3 0.883

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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