EUR/GBP Technical Analysis: Euro Rallies Most in 3 Weeks
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- EUR/GBP Technical Strategy: Flat
- Euro jumps most in three weeks, breaks February swing high vs. Pound
- Looking to re-enter short on new sell signal after prior attempt stops out
The Euro scored another victory against the British Pound, scoring the largest daily gain in three weeks and taking out resistance capping gains since late February. The move played out against a backdrop of broad-based GBP weakness potentially linked to the start of the second quarter and new UK fiscal year.
From here, a break above resistance in the 0.8014-34 area marked by a horizontal barrier dating back to June 2014 and the 38.2% Fibonacci expansion exposes the 0.8126-58 zone (50% level, February 17, 2014 low). Alternatively, a reversal back below resistance-turned-support at 0.7928, the February 25 high, paves the way for a test of the March 29 bottom at 0.7830.
Our 2016 fundamental outlook argues that recent Euro gains represent a correction in the context of a longer-term down trend against the Pound. With that in mind, we will stand aside and wait for the move higher to provide a selling opportunity rather than look to enter long. Our prior short position from 0.7854 has been stopped out.
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