FX.co ★ FX-Perfact | EUR/GBP

EUR/GBP H4 Timeframe: Based on price movements on the EUR/GBP H4 timeframe chart, the currency pair's technical structure indicates a shift in character from a bearish trend to a bullish recovery and consolidation phase. At the beginning of the period seen on the chart, EUR/GBP experienced quite strong selling pressure, with the price moving from the 0.8620–0.8640 area to the 0.8450 area. This decline demonstrated clear seller dominance, marked by a series of lower highs and lower lows. However, in mid-July, selling pressure began to lose momentum, and the price formed a bottom around 0.8454. From that point, the price structure began to gradually change, with higher lows and higher highs forming. This condition is an early indication that the market is entering a reversal phase, or at least a recovery phase, after a prolonged bearish trend. From a moving average perspective, the 100- and 200-day moving averages provide important information regarding this change in momentum. During the previous downturn, the price was below both moving averages, making the 100- and 200-day moving averages act as dynamic resistance areas. The two moving averages, which tend to be above the price, reinforce bearish pressure and indicate that sellers still control the market structure. When the price reached the 0.8454 area in mid-July, downward pressure began to ease. Afterward, the price gradually moved upward and successfully broke through the 100-day moving average (MA). This breakout was an important signal, indicating that medium-term momentum was shifting from bearish to neutral to bullish. Subsequent movements also showed the 100-day moving average (MA) changing direction from descending to flatter and then slightly rising. This was a quite positive development for EUR/GBP. The 200-day moving average (MA), which had previously been bearish, also began to lose downward pressure. Although the 200-day moving average (MA) is not yet showing a very strong bullish slope, this change in direction indicates that the previous downtrend is losing strength. Therefore, the price, now above the 100-day and 200-day moving averages, confirms that the medium-term technical conditions are much more constructive than at the beginning of the chart.

An interesting point is the relationship between the 100- and 200-day moving averages on the right side of the chart. The two moving averages appear to be getting closer together after previously being quite far apart. This condition usually indicates that the momentum of the previous trend is weakening. When the price is able to maintain above both moving averages, the possibility of a bullish phase becoming more likely. However, traders should still monitor whether the 100-day moving average is truly able to move and maintain above the 200-day moving average. A bullish crossover, or golden cross, occurs in the following period, providing additional confirmation that the medium-term trend structure has shifted to a more positive one. In terms of horizontal support and resistance, the 0.8586 area is a very important level to monitor at this time. On the chart, the horizontal line around 0.8586 represents resistance that has repeatedly limited price increases. The latest price movement appears to be moving upward with quite strong momentum and is currently testing this area. In fact, the recent candles indicate a bullish impulse that is bringing the price back closer to resistance. If EUR/GBP can successfully break through 0.8586 and then close above that level on the H4 day, the chances of continued upside are greater. A breakout accompanied by strong volume or momentum would be a more convincing signal than a temporary breakout. If the 0.8586 resistance level is successfully broken, attention can then shift to the 0.8617 area. This level is the next important horizontal resistance level clearly visible on the chart. The 0.8617 area also has the potential to be a re-entry point for sellers, as it was previously a significant zone in the price structure. If bullish momentum is maintained, EUR/GBP could potentially move towards 0.8617 before testing higher resistance around 0.8650. The 0.8650 level is a major resistance level at the top of the chart and a crucial boundary for medium-term bullish movement. Successfully breaking through 0.8650 would be a very positive technical development as it could open the door for a stronger uptrend to form. On the other hand, if the price fails to break through 0.8586 and experiences rejection, traders should consider the 0.8531 area as the nearest support. The 0.8531 level is a crucial zone because it is located near the previous consolidation area and relatively close to the moving average. As long as the price remains above 0.8531, a correction from the 0.8586 resistance can still be considered a normal pullback within a bullish structure. In other words, a decline towards 0.8531 does not necessarily invalidate the bullish scenario as long as that support remains intact. The next support level is around 0.8488. This area becomes increasingly important if EUR/GBP experiences a deeper correction. A decline towards 0.8488 will test whether buyers can maintain the higher lows structure formed since mid-July. If the price is able to bounce off this area, the recovery structure still has a chance to continue. Conversely, if 0.8488 is broken through by strong selling pressure, the bullish momentum will begin to lose its validity, and the risk of price movement returning to sideways or bearish will increase. The lowest support level on the chart is around 0.8454, which also served as a key low point in the previous downward phase. As long as this level remains unbroken, the overall recovery structure can be maintained. In terms of price action, EUR/GBP on the H4 chart shows quite interesting developments. After reaching a low around 0.8454, the price did not immediately rise vertically but first established a basic structure. From this area, a series of higher lows emerged, followed by higher highs. This pattern is a common characteristic of a trend change. The rise towards the 0.8586 area also indicates that buyers are gradually retaking the price area previously controlled by sellers. However, the consolidation occurring around 0.8540–0.8560 suggests that the market still needs a catalyst to determine its next direction. Currently, the price's position quite far above the 100- and 200-day moving averages (MAs) provides an advantage for buyers, but also increases the possibility of a short-term pullback. After a relatively rapid rise towards the 0.8586 resistance, the price doesn't necessarily have to immediately resume rising. A retracement towards the 100-day moving average (MA) or the 0.8531 support area can actually be a healthy process to test buyers' strength. If this correction results in a bullish rejection and the price rises again and breaks through 0.8586, the bullish signal will be stronger. Conversely, if the price fails to stay above the 100-day moving average and returns below both moving averages, the previous bullish breakout should be considered a false breakout, or at least, the bullish momentum is not yet strong enough. In a bullish scenario, the primary confirmation is EUR/GBP's ability to break through 0.8586 and maintain the price above it. After the breakout, the next technical targets are 0.8617 and then 0.8650. This structure will solidify if the 100-day moving average (MA) continues to rise and begins to move above the 200-day moving average (MA). This would indicate increasing bullish momentum from a medium-term perspective. A more conservative strategy is to wait for a breakout and retest, as a successful retest of 0.8586, which then functions as support, could provide additional validation for the breakout. Meanwhile, a bearish scenario will begin to gain traction if the price fails to maintain the 0.8586 area and subsequently breaks through the 0.8531 support level. A decline below 0.8531 would indicate that buyers are beginning to lose control of the short-term momentum. If selling pressure persists and breaks through 0.8488, the recovery structure since mid-July will weaken further. Under such conditions, market attention could return to 0.8454. A breakout of 0.8454 would be a much more serious bearish signal, as it would indicate a successful breach of the previous low, increasing the likelihood of a lower low forming again.