EUR/GBP Technical Analysis – Opting to Pass on Short Trade
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- EUR/GBP Technical Strategy: Flat
- Support: 0.8030 (38.2% Fib exp.), 0.7992 (50% Fib exp.)
- Resistance:0.8076-81 (May 23 low, 23.6% Fib exp.), 0.8105 (14.6% Fib exp.)
The Euro dropped to the lowest level in 18 months against the British Pound after taking out the May swing bottom. Support is now at 0.8030, the 38.2% Fibonacci expansion, with a daily lose below this barrier exposing the 50% level at 0.7992. Alternatively, a turn back above resistance in the 0.8076-81 area – marked by the 23.6% Fib and the May 23 bottom – clears the way for a challenge of the 14.6% expansion at 0.8105.
While taking a short position at current levels is tempting, emerging signs of positive RSI divergence hint downward momentum may be ebbing. We will tactically opt not to chase the pair lower here.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com