The EURGBP cross in the hourly chart shows an Ending Diagonal pattern which suggests declines ahead. As the theory says, a bearish divergence indicates not only the exhaustion of the previous movement. It’s also indicative of the presence of a wave 3 and a wave 5.
Our short-term scenario
The breakdown and close below 0.9205 activate our bearish scenario. Profit targets are 0.9155 and 0.9125; the invalidation level is at 0.92536.
You can read more about this and other EW trading setups in our post “Understanding Corrective Waves – Part II – Triangles and Trading Setups.”