We talked about EURGBP pair already back on May 11, where we mentioned that it had likely completed a complex WXY structure within wave D of a larger A-B-C-D-E triangle and warned that the pair could be entering the final wave E decline. CHECK IT HERE
On May 20, we also noted that wave E was expected to unfold in three legs, with a corrective wave (B) potentially taking the shape of a bearish triangle before another move lower within wave (C).
Today, a closer look at the 4-hour chart shows that this scenario is playing out as expected. EUR/GBP is finally breaking below the lower boundary of the bearish triangle pattern that developed within wave (B), while also slipping beneath the February and March lows. This breakdown provides an important bearish confirmation and suggests that sellers are regaining control of the broader trend.
Following the completion of the triangle, the market formed a bearish impulsive setup with visible subwaves 1 and 2. As such, EUR/GBP now appears to be entering wave 3 of a larger five-wave bearish impulse. Since third waves are typically the strongest and steepest portion of an impulse sequence, the current decline has the potential to accelerate and extend over the coming sessions and weeks.
While the broader outlook remains bearish, traders should remain aware of short-term intraday pullbacks, which are common during impulsive declines and can provide temporary relief rallies before the downtrend resumes. As long as the recent breakdown remains intact, the path of least resistance appears to be lower, supporting the view that wave (C) of the larger wave E decline is now underway.
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