EUR/GBP crashed inside multi-month range

The EUR/GBP exchange rate has fallen back into its several-month range. It is falling to the floor of the range, where it will probably find firm support. Based on the range’s height, a decline would trigger downside objectives.

After experiencing five straight days of declines, the EUR/GBP pair is now trading back within its multi-month range. The range is approximately between a floor at 0.8530 and a ceiling height of 0.8600. As of this writing, the EUR/GBP pair is trading at 0.8535, down -0.27%.

The EUR/GBP pair has fallen to 0.8541, which is quite close to the range floor at 0.8530. At the level of the range floor it is likely to encounter relatively tough support, and will probably bounce, at the very least temporarily.

A decisive break below the range low would open the way for more downside to the next target lower at 0.8486. This is the 0.681 Fibonacci ratio of the height of the range extrapolated down from the channel’s base, the method used by technical analysts to estimate range breakouts. Further weakness could even see price match the target at 0.8460.

EUR/GBP broke out of the top of its multi-month consolidation range on April 19 and rose up to a peak of 0.8645 before forming a Tweezer Top candlestick reversal pattern at the highs, reversing and tumbling back down. The Tweezer Top forms when two adjacent candlesticks peak, their wicks are of similar length, and end at the same or very similar levels.

The pair then declined rapidly, breaking back inside the range and is now on its way to the range lows. EUR/GBP is in a sideways trend which is forecast to continue until a directional bias proves otherwise.