EUR/GBP recently showed signs of a potential reversal as it formed a two-bar pattern and filled a price gap on the charts. This suggests that the correction from the June 14 lows may have ended, and the pair could be entering a new downtrend phase.
After filling the price gap between 0.8472 and 0.8490, EUR/GBP formed a bearish two-bar reversal pattern on July 1-2. This pattern typically occurs after an uptrend, signaling a potential change in sentiment. Combined with the gap-fill, it indicates that the pair may be rolling over and moving lower.
On the daily chart, EUR/GBP appears to be in a medium-term downtrend, supporting the idea of a potential downward move. A break below the June 28 low of 0.8457 would confirm this bearish outlook, with the next target at the June 25 low of 0.8431.
The Moving Average Convergence Divergence (MACD) on the 4-hour chart has also crossed below its signal line, further suggesting that the correction may have ended and the pair is now turning lower. However, a break above the July 1 high of 0.8499 could indicate a continuation of the correction higher, with the 50-day Simple Moving Average at 0.8517 as the next resistance level to watch.