Forex: EUR/GBP Technical Analysis – Bounce to Yield Short Setup
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- EUR/GBP Technical Strategy: Flat
- Support: 0.8219 (14.6% Fib ret.), 0.8167 (Jan 22 low)
- Resistance: 0.8258 (23.6% Fib ret.), 0.8316-20 (38.2% Fib ret., trend line)
The Euro began a recovery against the British Pound as expected after prices produced a bullish Piercing Line candlestick formation, hinting a double bottom is being formed the January 22 low (0.8167). A daily close above resistance at 0.8258, the 23.6% Fibonacci retracement, targets a falling trend line set from late October at 0.8316 and the 38.2% level at 0.8320. Alternatively, a turn back below the 14.6% Fib at 0.8219 exposes 0.8167 anew.
Risk/reward considerations argue against a trade at current levels as the pair trades wedged in close proximity to relevant up- and downside barriers. We will remain flat for now, looking for a move to trend line resistance to produce a selling opportunity.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com