EUR/GBP is moving up to a gap in the price charts formed when prices were rapidly selling-off earlier in June.
There is a possibility it could fill the gap if it continues higher.
A roughly equal risk exists that EUR/GBP resuming its prior downtrend and making new lows.
EUR/GBP has recovered after breaking out of the range that it was trading in, in late May and falling steeply.
EUR/GBP 4-hour Chart
During the steep decline the pair formed a gap in price (red shaded area). There is a saying amongst traders that “gaps like to get filled” and there is a chance price could now rise up and close this gap. A break above the 0.8468 high would probably confirm a closing of the gap between 0.8472 and 0.8490.
The direction of the short-term trend is in doubt since the recovery from the June 14 lows at 0.8397. On the one hand it could be argued that it is still bearish and prices could capitulate and fall at any moment.
On the other hand there is the effect of the price gap which could draw prices higher.
If EUR/GBP does roll over and resume its short-term downtrending bias, a break below 0.8397 would see the pair fall to the next downside target at 0.8340 (August 2022 low).
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