EUR/GBP Price Analysis: Downmove reaches critical support level

• EUR/GBP price has fallen to support from the top of a multi-month range at 0.8590. 
• Despite bearish signs the pair could yet rally as the short-term trend remains technically bullish. 
• A decisive break below the support level, however, would indicate deeper decline back into the range.  

EUR/GBP price has reversed and fallen to a key support level at around 0.8590, where it is currently consolidating. 

During volatile trading on April 19 the pair broke out of its multi-month range and rose up to a peak of 0.8645, however, it quickly reversed and fell back down. 

EUR/GBP Daily Chart

EUR/GBP hit its initial conservative target for the range breakout at the 0.618 Fibonacci extrapolation of the height of the range higher. This could mean there will be no further upside. However, if the pair reaches the optimistic target for the breakout it could still rally up to roughly 0.8660. 

The pair formed a bearish Tweezer Top Japanese candlestick pattern at the highs (circled) which occurs when two consecutive days have similar candle wicks (the thin upper part of the candle) and these wicks end at similar highs. It is a fairly reliable reversal sign. 

The support level currently holding up price is the top of a range that began in February. It is likely to be a tough nut for bears to crack and push price lower. 

A decisive break below the top of the range would be required to confirm more weakness possible to a target at 0.8530. 

"Decisive" means a break by a long red candlestick that closes near its low or a break by three consecutive red candlesticks. 

4-hour Chart 

The 4-hour chart shows that a bearish M-shaped Double Top pattern formed at the highs of April 22-23. The pattern subsequently broke below its neckline (gray line at 0.8622) and plummeted. It has reached its price target which is equivalent to the height of the pattern extrapolated lower. This  suggests a waning in bearish momentum. 

The pair is not technically in a short-term downtrend despite recent weakness. Ideally it would need to form a more consistent trend of falling peaks and troughs before it could be said to be in a downtrend. 

Since there remains a chance EUR/GBP could still be in an uptrend, and that support from the top of the range has not yet been broken, the materialization of further upside is still a very real possibility.  

The level of the neckline of the Double Top at 0.8622 is likely to present resistance if an upmove evolves.