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- EUR/GBP Technical Strategy: Short at 0.8357
- Support: 0.8325 (23.6% Fib ret.), 0.8293 (38.2% Fib ret.)
- Resistance: 0.8377 (Mar 13 high)
The Euro may be readying to turn lower against the British Pound after prices put in a bearish Dark Cloud Cover candlestick pattern below the 0.84 figure. Negative RSI divergence bolsters the case for a downside scenario. Initial support is at 0.8304, the 23.6% Fibonacci expansion, with a break below that exposing the 38.2% level at 0.8259. Near-term resistance is at 0.8377, the March 13 high.
We opted against selling the pair last week but a shallow recovery has now augmented risk/reward parameters, allowing for viable short entry setup. We will trigger the trade here, with a stop-loss set to trigger on a daily close above 0.8377. Profit on half of the position will be booked at 0.8304, at which point the stop-loss on the remainder will be trailed to the breakeven mark.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com