I’m seeing a classic chart pattern forming on the 4-hour chart of EUR/GBP!

Are we about to see trend reversal soon?

Try this near-term resistance I’m watching:

EUR/GBP 4-hour Forex Chart by TradingView

The Bank of England’s decision to chop rates of interest spurred a pointy drop for sterling against the euro, as slowing underlying inflation convinced some MPC members to ease monetary policy.

This was enough to lift EUR/GBP above the .8450 minor psychological mark and take it closer to the .8500 major psychological mark, making a double bottom pattern on its 4-hour time-frame.

Will we see a neckline breakout and reversal from here?

Do not forget that directional biases and volatility conditions in market price are typically driven by fundamentals. When you haven’t yet done your fundie homework on the euro and the British pound, then it’s time to examine out the economic calendar and stay updated on every day fundamental news!

Sustained bearish pressure on sterling could take the pair past R2 (.8480) and onto a bullish break of the longer-term area of interest, potentially sparking a rally that would last by the identical height because the formation or roughly 100 pips.

Then again, holding as resistance could send EUR/GBP back all the way down to the near-term support zones at R1 (.8460) or all the way in which all the way down to the lows near S1 (.8400).

The 100 SMA is below the 200 SMA to suggest that the trail of least resistance is to the downside, nevertheless it’s also price noting that price is above each moving averages as an early indication of a trend shift in favor of bulls.

Nevertheless you select to trade this setup, be sure you’re following your trading plan and using your best risk management moves so you possibly can trade for an additional day!