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EUR/GBP Technical Analysis: Opting to Hold Short Trade

EUR/GBP Technical Analysis: Opting to Hold Short Trade

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Talking Points:

The Euro is attempting to mount a recovery against the British Pound having found interim support after dropping to the lowest level in two months. The pair carved out a top as expected having produced a bearish Dark Cloud Cover candlestick pattern.

A cautious move higher through resistance at 0.7215, the 14.6% Fibonacci retracement, has exposed the next upside barrier at 0.7244 marked by the 23.6% level. A further move above that on a daily closing basis targets the 0.7278-92 area marked by the 38.2% Fib and a falling trend line. Alternatively, a move back below 0.7215 – now acting as support – opens the door for a retest of the October 23 low at 0.7168.

We entered short EUR/GBP at 0.7325 and subsequently booked profit on half of the position. While the move through immediate resistance is a bit worrisome, the down trend established from the October 13 high remains intact. With that in mind, we look to near-term gains as corrective for now and keep the second half of the position in play with a stop-loss at the breakeven level.

Losing Money Trading Forex? This Might Be Why.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.