EUR/GBP Technical Analysis: Waiting to Re-Enter Short
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- EUR/GBP Technical Strategy: Flat
- Support: 0.7873, 0.7777, 0.7728
- Resistance: 0.7953, 0.8051, 0.8082
The Euro moved lower against the British Pound as expected after showing a bearish Dark Cloud Cover candlestick pattern. A daily close below 0.7873-96 area marked by the July 23 low and the 23.6% Fibonacci expansion exposes the 0.7777-0.7803 zone (July 2012 bottom, 38.2% level). Alternatively, a reversal above the 14.6% Fib at 0.7953 clears the way for a test of the 0.8030-51 zone (September 9 close, channel top).
Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.