EUR/GBP dropped sharply to as low as 0.8695 last week as fall from 0.9324 resumed. Initial bias stays on the downside this week for 61.8% projection of 0.9324 to 0.8786 from 0.9019 at 0.8687 first. Break will target 100% projection at 0.8481. On the upside, above 0.8792 minor resistance will turn intraday bias neutral. But recovery should be limited well below 0.9019 resistance to bring fall resumption.

In the bigger picture, we’re now seeing 0.9324 as a medium term top on bearish divergence condition in weekly MACD. Price actions from there should develop into a corrective pattern. Deeper fall should be seen back to 38.2% retracement of 0.6935 to 0.9324 at 0.8411 but strong support should be seen there, at least on first attempt. On the upside, break of 0.9324 is needed to confirm up trend resumption. Otherwise, risk will stay on the downside even in case of strong rebound.

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In the long term picture, rise from 0.6935 (2015 low) could either be resuming the up trend from 0.5680 (2000 low). Or it’s just the second leg of the consolidation pattern from 0.9799 (2008 high). Eventual structure of the pull back from 0.9324 should reveal which case it should be.

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