EUR/GBP Off Resistance- Broader Outlook Constructive Above 7645
- EURGBP weekly opening range taking shape- risk for steeper pullback
- Updated targets & invalidation levels
Chart prepared by Michael Boutros
Technical Outlook: Last month we highlighted risks to the short-bias in EURGBP with key support seen at 7564 & 7523. The pair rallied into the end of the month with the advance reversing off Fibonacci resistance early this week at 7905. We’ve now filled the Sunday open gap with the decline encountering near-term support at 7750 (2012 low). Note that the pair turned just ahead of the median-line extending off the lows and the implications for a move lower before resumption of the July 2015 advance.
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Notes: The pair has set the weekly opening range between Fibonacci targets at 7775-7900 and we’ll be working with a general short-bias while below the weekly open. A downside break of this range targets subsequent support objectives at 7735, the 61.8% retracement at 7695 and the lower median-line parallel which converges on the 76.4% retracement at 7645- an area of interest for exhaustion / long entries.
Interim resistance stands at 7830/40 with our near-term bearish invalidation level set to the 79-handle. A breach above this region shifts the focus higher targeting 7945 backed by 7986. A quarter of the daily average true range (ATR) yields profit targets of 24-28pips per scalp. Event risk is rather light heading into the close of the week so we’ll be looking to broader sterling price action for cues.
We’ve following this setup on SB Trade Desk for the past few weeks and from at trading standpoint, I would be looking for a move lower to ultimately offer more favorable long-entries. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.
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---Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.