The EUR/GBP pair has made a sudden break lower, out of the channel it was moving down within, yielding a downside target of 0.8068, using the width as a guide. This happens to be only 2 pips above the July 2010 major lows at 0.8066 and indicates the possibility the lows could be reached. Currently it appears to be putting in a dragon-fly doji on the 4-hr chart at the S3 weekly pivot and there is the possibility of a base forming and a temporary bounce to resistance at 0.8200. After that I see a strong possibility of a resumption of the fall with the 0.8068 level targeted eventually, although the monthly pivot at 0.8125 could also be reached.

Analysis prepared by:

Joaquin Monfort
Forex4you analyst