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EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386

EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386

Michael Boutros, Strategist

Talking Points

EURGBP Daily

EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURGBP reverses off multi-year trendline resistance- medium-term focus is lower
  • Support objectives at 7334/44 backed by a key confluence at 7277- broader bullish invalidation
  • Resistance & near-term bearish invalidation at 7386
  • Breach above 7420 needed to shift long bias back in focus
  • Daily RSI holding sub 60 / pending support trigger break – bearish
  • Event Risk Ahead: Eurozone Final CPI tomorrow and ECB & UK Retail Sales Next week

EURGBP 30min

EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386

Notes: EURGBP responded to key long-term resistance this week with a break below the weekly opening range today shifting the focus back to the short-side. The pair continues to trade within the confines of a newly formed descending median-line formation with interim support targets seen at 7344 backed by a key support confluence into the lower median-line parallel at 7308.

Bottom line: looking to sell rallies while below key near-term resistance at the confluence of the October open, the June high and the May high/reversal-day close at 7386. A breach above 7420 would be needed to put the broader long-bias back in play.

A quarter of the daily average true range (ATR) yields profit targets of 17-20 pips per scalp (keep in mind these are sterling pips). Caution is warranted heading into the close of the week with key ECB & UK retail sales data next week likely to fuel added volatility in euro & sterling crosses.

For updates on this scalp and more setups throughout the week subscribe to SB Trade Desk

Relevant Data Releases Next Week

EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list

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