The Euro-to-Pound exchange rate is looking increasingly bearish in the hours running up to the announcement of the European Central Bank (ECB) policy meeting decision.

As we approach 'crunch time', it is interesting to note how the EUR/GBP exchange rate looks poised to extend its young downtrend, which would be indicative of increasing Euro weakness and/or Pound strength.

Such a move would dovetail nicely with more dovish expectations that the ECB will seek to contain the Euro's rapid appreciation in order to protect fragile inflation in the region.

If the early technical hints are a representation of what is to follow, then it would seem to suggest the adoption of a more cautious tone by Draghi and the governing council, and a potential postponement in the dismantling of the apparatus of stimulus in the Eurozone.

After all, in its June meeting the ECB talked of maybe discussing the end of QE in "the fall" - which could be taken to mean either September, October or November, but probably the middle month.

Euro to Pound: Hints of a Reversal

If we look carefully at the EUR/GBP rate activity we note how it has started to exhibit signs of early trend reversal on the first time-frame chart to herald such things: the intraday four-hour chart.

The most compelling evidence from the four-hour chart is the tumbling sequence of peaks and troughs cascading down from the 0.93 peak to the current 0.91s.

The move seems too sharp to fit the diagnosis of a pure pull-back and is more indicative of trend reversal.

The peaks and troughs are also now multiple whereas in the case of the correction they would tend to number but three, as in the classic example of the ABC type corrections.

The development lends itself more to extrapolation lower than recovery higher, and we expect the mini-downtrend to continue.

Our view is that a break below the 0.9125 lows would provide confirmation of more downside, with the next target at 0.9060 where a major trendline sits and is likely to contain further downside.

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Key Support at 0.9110-0.9140

Analysts often talk in terms of "support and resistance" at such and such a level - but what do they mean?

Essentially, that charts have key touchpoints which attract outsized buying or selling activity, which usually leads to the trend stalling or churning at those levels - sometimes even to the trends reversing.

One key level which has been identified on EUR/GBP is a zone between 0.9110 and 0.9140, ie where the previous day's lows sit.

According to analyst Fawad Razaqzada or Forex.com, this level is key to determining the longer-term trend.

In his view, as long as this level holds the pair could still mount a recovery and resume its uptrend.

"None of the key support levels have broken down yet. The most important support in my view is around 0.9110-0.9140, which was being tested at the time of this writing," says the analyst.

The level was formerly an area of resistance before the uptrend broke through it and it became support 'on the way back down'.

It is also where a key moving average, the 21-day provides, dynamic support and resistance.

According to Razaqzada, only a break below this band of support would indicate the accession of a new downtrend, and "until and unless that happens, one has to treat this as a normal pullback in what still is a bullish trend."

Any move back above the low of 0.9250 would invalidate the short-term bearish bias according to the analyst.

EUR/GBP "Under Pressure" Notes Commerzbank

The Euro to Pound pair is vulnerable to erosion of the "accelerated uptrend" according to Commerzbank's technical analyst Karen Jones.

She now sees the pair likely to react back a Fibonacci ratio of 23.6% to a level at 0.9075 or the four-month support line at 0.9030.

Jones's "erosion of the accelerated uptrend" sounds very much like a "parabolic blowout" or 'channel overshoot' - phenomena which are both signs of trend exhaustion, and further, enhance the view that a bearish reversal may be occurring.