EUR/GBP Technical Analysis: Short Trade Setup Outlined
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- EUR/GBP Technical Strategy: Pending Short at 0.7839
- Support: 0.7804, 0.7761, 0.7727
- Resistance: 0.7868, 0.7891, 0.7926
The Euro may be ready to resume its down trend against the British Pound after prices put in a bearish Three Inside Down candlestick pattern. A daily close below the 23.6% Fibonacci expansion at 0.7804 exposes the 0.7761-65 area marked by the 38.2% and the September 30 low. Alternatively, a turn above 0.7856-68 area (Triangle floor, 38.2% Fib retracement) clears the way for a test of the 50% threshold at 0.7891.
Risk/reward considerations argue against entering short with prices in close proximity to support. With that in mind, we will establish an order to enter short at 0.7839. If triggered, the trade will initially target 0.7804 and carry a stop-loss activated on a daily close above 0.7873.
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Daily Chart - Created Using FXCM Marketscope
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com