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EUR/GBP Technical Analysis: Support Found Below 0.79?

EUR/GBP Technical Analysis: Support Found Below 0.79?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Support: 0.7873, 0.7777, 0.7728
  • Resistance: 0.7953, 0.8046, 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 0.8030-46 zone (September 9 close, channel top).

Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, an Inverted Hammer candlestick is insufficient by itself to make for a bullish reversal signal without further confirmation. We will remain flat for now.

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EUR/GBP Technical Analysis: Support Found Below 0.79?

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.

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