The EUR/GBP chart is consolidating the breakout of a major eight-to-nine month bull wedge, but the corrective downside should be limited to 0.8821 before expectations of fresh EUR bull pressure towards the bull wedge peak at 0.9804 gets underway. The EUR/GBP currency pairing is trading within a 13-day expanding triangle, which has been responsible for the recent choppy non-directional swings in the market. Expanding triangles are fairly rare and have diverging support and resistance lines, as opposed to the more conventional converging lines for all other triangles.
Last week's marginal low at 0.8907 marked 50% retracement of the dominant five-month 0.8401/0.9412 advance, and the failure to attract follow-through below the previous reaction low at 0.8913 has extended this period of uncertainty, prompting a recovery to the triangle midpoint level around 0.8985. However, a clue to the direction of the next breakout can be seen by looking at the weekly chart, highlighting weekly closes in the bottom 25% of the bars, and lower lows.
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