Pending Short EUR/GBP
Now that the Swiss Franc can no longer serve as a safe haven currency and will be used primarily as a funding currency, there exists a need for another safe haven alternative against the Euro. Enter the British Pound. With the EUR/GBP failing to break above a significant Double Top set in mid-July and mid-August, as well as holding above its Range Bottom dating back to early June, as well as another shorter-term rising Trend Line a breakout opportunity to the downside looks to be on the horizon.The broader fundamental picture that is worsening sharply for the Euro and the Euro-zone confirms this bias.
The daily RSI remains capped by the 60 level, trading at 42; in a bear market, the RSI often fails to break above the 50 to 60 area. The daily RSI has not moved above this zone since July 4. Similarly, the MACD Histogram has diverged bearishly, at -4.8 currently. Also, the Slow Stochastic oscillator suggests further losses in the near-term, with the %K less than the %D, at 46 and 49, respectively.
Entry: Short at 0.8660/50 [Trend Line Support, 100.0 FiboExt]
Stop: Stop to 0.8752 [76.4 FiboExt, 92-pip Risk]
Target 1 (Reward/Risk Ratio): 0.8587 [61.8 FiboRet] (73/92, 0.79)
Target 2: 0.8472/60 [76.4 FiboRet, March Low] (188/92, 2.04)
Target 3: 0.8284 [100.0 FiboRet, 2011 Low] (376/92, 4.09)
Timeframe: 3- to 8-days
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