The European Central Bank’s (ECB) hawkish hike and the Bank of England’s (BOE) hold decision kept EUR/GBP cruising higher this month.
But with the pair hitting a ceiling at its channel top, is a correction in the works?
Check out these nearby support zones on the 4-hour chart!
EUR/GBP: 4-hour
EUR/GBP 4-hour Forex Chart Faster With TradingView
This pair has formed higher lows and higher highs throughout August and September, as hawkish ECB hopes contrasted with cautious BOE expectations.
At the same time, elevated Middle East tensions over the past month sparked risk-off flows that favored EUR over the pseudo-risk currency GBP.
Is the pair about to find support at nearby correction levels?
EUR/GBP is hanging out at its channel top, possibly gearing up for a correction to gather more bullish energy.Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The Fibonacci retracement tool shows that the 38.2% level is close to the pivot point (.8590) and mid-channel area of interest that could attract more buyers to sustain the climb.
A larger correction could still dip to the 50% Fib or 61.8% level that coincides with S1 (.8580) that could be the line in the sand for a bullish pullback.
Keep an eye out for reversal candlesticks at these levels, as a continuation of the uptrend could take EUR/GBP back up to the swing high or the channel top closer to R1 (.8620).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
EUR/GBP is testing its channel top with Fibonacci and pivot levels lined up below, but you may not be familiar with how traders use these tools to tell a pullback apart from a trend reversal. Premium members can read our lesson:
📖 How to Identify Reversals and Retracements
Reading this helps you understand how Fibonacci levels map potential correction zones, how pivot points and trend lines add confluence to those levels, and how to judge whether a dip like this one in EUR/GBP is a retracement or the start of a reversal.
And if you’re not a Premium subscriber yet, consider joining.
With Babypips Premium, you get full access to School of Pipsology lessons that help you understand not just where the support levels sit on the chart, but how to judge whether a pullback is likely to hold.
