EUR/GBP at the Support of a Flag Pattern Within a Flag Pattern

The 1H EUR/GBP chart shows a market that is testing its bearish intent. It showed some bearish momentum pushing the RSI below 30, but if the reading can’t hold below 60, this bearish momentum is lost. Also, if EUR/GBP can’t stay below the 200 hour simple moving average and pushes above 0.8350, the market is not clearly bearish, and more likely sideways or even bullish in the short-term.

The market is at this flag pattern support at the moment. A hold below 0.8350, and a break below the flag pattern that brings the RSI back below 40 would be a confirming sign for further bearish market in the short-term. A return to 0.84 and 0.8420 can be seen in the context of a sideways market. Further upside can be seen to the 0.85 pivot area (seen in the daily chart) as well if the market pushes above 0.8420. A bullish market can be developing if EUR/GBP can push back above 0.86, near 61.8% retraement and the 200-day SMA.

When zooming out to the daily chart, we can see that the EUR/GBP is also trading at the support of a larger flag pattern. A break below this pattern first targets the lows between 0.8220 and 0.8250 with a swing projection. There is also further scope for downside to the next support pivot near 0.8140, established August 2010.