EUR/GBP Technical Analysis: July Bottom in the Spotlight
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- EUR/GBP Technical Strategy: Flat
- Support: 0.7873, 0.7777, 0.7728
- Resistance: 0.7953, 0.8049, 0.8082
The Euro declined as expected against the British Pound after showing a bearish Dark Cloud Cover candlestick pattern. Near-term support is in the 0.7873-96 area, marked by the July 23 low and the 23.6% Fibonacci expansion, with a break below that on a daily closing basis exposing the 0.7777-0.7803 zone (July 2012 bottom, 38.2% level). Alternatively, a turn above the 14.6% Fib at 0.7953 opens the door for a challenge of the 0.8030-49 zone (September 9 close, falling channel top).
Prices are too close to support to justify entering short from a risk/reward perspective. On the other hand, the absence of a defined bullish reversal signal suggests that taking up the long side is premature. With that in mind we will remain flat for now.
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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.