The EUR/GBP currency pair, on the H4 time-frame, was in an upward path until 24th of May when a higher top was recorded at 0.88504. Supply pressure overwhelmed the demand in the market as sellers started to find the price attractive, causing the upward momentum to be disrupted. After the high at 0.88504, the price broke through the 15 and 34 Simple Moving Averages with the Momentum Oscillator breaking the zero baseline. This suggested that a possible technical reversal might be in progress.
A possible critical support level formed when a bottom was recorded at 0.87900 on the 27th of May. Buyers tried to push the market higher but supply again overcome demand with a lower top forming at 0.88430 on the same day. This resistance level was confirmed on the 28th of May.
However, since then the market has been making an ever-tightening wedge with neither the bulls nor the bears gaining the upper hand. A clue to the probable breakout side might be when the sellers tried to drive prices lower on the 29th of May with the wedge temporarily being breached, and although the bulls managed to push the market higher, no new tops could be formed, suggesting that there is no real demand in the market at the moment.
If the EUR/GBP currency pair breaks through the critical support level at 0.87900, then three possible price targets may be projected from there. Attaching the Fibonacci tool to the lower bottom at 0.87900 and dragging it to the top of the last decent pullback at 0.8430, the following targets may be calculated. The first target can be anticipated at 0.87572 (161 %). The second price target can be predicted at 0.87041 (261.8%) and the third and final target may be expected at 0.86182 (423.6%).
If the top at 0.88430 is broken, the possible scenario is invalidated and will need to be re-evaluated.
If sellers manage to keep a negative sentiment and supply overcomes demand, the outlook for the EUR/BGP currency pair on the H4 time-frame might become increasingly bearish.
Order cancelled
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The top at 0.88430 was broken so the trade was cancelled
EURGBP is supported at 0.8790 area by the 200 SMA in the daily time frame and so I think a strong fundamental news is required to break it down for EG to go bearish. Otherwise my short positions in EG will be at a loss.