Forex: EUR/GBP Technical Analysis – Trend-Defining Resistance Eyed
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- EUR/GBP Technical Strategy: Flat
- Support: 0.8309 (23.6% Fib ret.), 0.8255 (14.6% Fib ret.)
- Resistance: 0.8358 (trend line), 0.8397 (38.2% Fib ret.)
The Euro is nearing a critical technical barrier as prices approach a trend line guiding the down trend against the British Pound since August 2013 (now at 0.8358). A break above this barrier initially exposes the 38.2% Fibonacci retracement at 0.8397. Alternatively, a reversal below the 23.6% level at 0.8309 aims for the 14.6% Fib at 0.8255.
Entering long squarely below a trend-defining resistance level is unattractive from a risk/reward perspective. On the other hand, assuming the barrier will hold and entering short lacks confirmation from a defined reversal signal. We will stand aside for now, looking for prices to resolve themselves at the trend line before committing to a directional bias.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com