In today’s technical analysis, let’s focus on EUR/GBP viewed from the daily chart, which gives us a clearer long-term perspective.
The dominant structure visible on the chart is a head and shoulders formation marked with blue rectangles. This is a classic bearish reversal pattern that often appears near the end of an uptrend.
Recently, the price finished forming the right shoulder of this pattern. As a result, the market is now positioned exactly at the neckline, marked with the red line. This level becomes the key decision point for the next major move.
If the price breaks below the red neckline and closes the day beneath it, the head and shoulders pattern will be activated. That would generate a clear sell signal and suggest the start of a larger bearish move.
The alternative scenario is also possible. If the price bounces from the neckline and moves higher, the bearish formation would be invalidated. Such a rebound would effectively cancel the head and shoulders setup and generate a buy signal instead.
At this stage, the market is sitting exactly at the level where the decision will be made. The reaction around the neckline will determine whether EUR/GBP enters a bearish phase or rejects the pattern and moves higher.