EUR/GBP Technical Analysis: Torn Between Competing Cues
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- EUR/GBP Technical Strategy: Flat
- Support: 0.7873, 0.7777, 0.7728
- Resistance: 0.7953, 0.8037, 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). However, a competing Morning Star candle pattern how warns a bounce may be in the cards. A reversal above the 14.6% Fib at 0.7953 clears the way for a test of the 0.8030-37 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 Morning Star setup seems to need further confirmation before becoming actionable considering the pair’s struggle to close back above 0.7896. 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.