EURGBP Reverses Off Critical Resistance- Shorts Favored Sub 7386
- EURGBP responds to major resistance- short scalps favored
- Updated targets & invalidation levels
- Event Risk on Tap This Week
Chart Created Using FXCM Marketscope 2.0
- 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
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.
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Relevant Data Releases Next Week
Other Setups in Play:
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- GBPUSD Rebound Testing First Resistance Barrier Ahead of BoE
- Webinar: Scalping Aussie Crosses post NFP - RBA, BOE, BoJ on Tap
---Written by Michael Boutros, Currency Strategist with DailyFX
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