For the best part of seven months, EUR/GBP was confined to sideways range between 0.8689 to 0.9033. But as Thursday’s bearish range expansion takes the cross to an 11-month low, it strongly suggests it's ready to trade in a new range.
Although we’d seen a spike beneath 0.8689 support in March, Thursday’s decisive close is a more convincing trigger to lure bears back to the table. And that range expansion is in line with dominant bearish momentum from the 0.8976 high, the breakout appears far more compelling. Therefore we’re seeking short opportunities below 0.8689 on intraday timeframes.
For downside targets, we have 0.8600 and 0.8524 in focus, but if we are to see momentum revert to the upside and turn a breakout into a ‘fakeout’, then it’s one for the backburner.
The slow grind of the past 7 months has kept EUR/GBP mostly out of our reach, but it’s interesting to note how the picture looks on the weekly chart. Like a slowly turning ship, EUR/GBP left a trail of clues that a longer-term top could be forming. Since failing to break the 0.9270 high and printing a dark cloud cover pattern, the cross has since broken its bullish trendline. While the ensuing weeks provided choppy candles, we suspect the corrective high has been seen following the recent break lower.
Of course, being a weekly chart, it leaves plenty of time for patterns to evolve. But, so long as key levels are broken (and remain that way) it paves the way for another trend to be born.