EUR/GBP Price Analysis: Descending triangle in the making, 0.8560 support holds the key

• EUR/GBP drifts into the negative territory for the fourth consecutive session on Monday.
• The recent price moves constitute the formation of a descending triangle on the daily chart.
• A sustained break below the 0.8560 support is needed to confirm a fresh bearish breakdown.

The EUR/GBP cross struggled to capitalize on its intraday positive move, instead met with some fresh supply near the 0.8612 area and refreshed daily lows in the last hour. The cross has now turned lower for the fourth consecutive session and was last seen hovering near daily lows, around the 0.8580 region.

From current levels, the next relevant support is pegged near the 0.8560 horizontal zone, representing May monthly swing lows, retested on Friday. The mentioned region marks the 61.8% Fibonacci level of the 0.8472-0.8719 recent bounce from multi-month lows and should now act as a key pivotal point for short-term traders.

This, along with a short-term descending trend-line resistance, constitutes the formation of a descending triangle on the daily chart. A convincing break through the triangle support will shift the near-term bias back in favour of bearish traders and prompt some aggressive technical selling around the EUR/GBP cross.

The downward trajectory could then accelerate towards the key 0.8500 psychological mark, with some intermediate support near the 0.8535-30 region. The EUR/GBP cross could eventually slide back towards challenging YTD lows, around the 0.8470 zone touched on April 5.

On the flip side, the daily swing highs, around the 0.8610-15 region now seems to act as immediate resistance. This is followed by a strong barrier near the 0.8635-40 supply zone, which coincides with the descending trend-line. A sustained strength beyond will negate the descending triangle and trigger some short-covering move.

The EUR/GBP cross might then aim to surpass the 23.6% Fibo. level resistance near the 0.8660-65 region and reclaim the 0.8700 round-figure mark. Some follow-through buying beyond the recent swing highs, around the 0.8720 region will be seen as a fresh trigger for bulls and pave the way for additional near-term gains.

EUR/GBP daily chart

Technical levels to watch