• EUR/GBP corrects in medium-term downtrend.
• It has moved up to partially fill the price gap and will likely eventually fill the rest.
• A break below the June 25 low would mean a resumption of the prevailing downtrend.

The EUR/GBP pair corrected after reaching a low of 0.8398 on June 14.

The pair appears to be in a medium-term downtrend which, given the “trend is your friend”, will likely resume once the pullback subsides. A break below 0.8431 (June 25 low) would signal such a resumption.

EUR/GBP daily chart

The initial downside target would be the June 14 low of 0.8399.

However, the correction may still continue higher as it has reached a gap (red shaded area). Gaps tend to fill up eventually, so there is a risk of prices rising further as the price fills the gap.

EUR/GBP 4-hour chart

The top and bottom points of a price gap usually represent support and resistance levels for the price. Therefore, if the price does fill the gap and tops at 0.8490, there is a risk that the price will stall and crash to a higher level.