EUR/GBP Technical Analysis: Chart Setup Hints at Bounce

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Talking Points:

• EUR/GBP Technical Strategy: Flat
• Support: 0.7616, 0.7556, 0.7507
• Resistance: 0.7691, 0.7765, 0.7800

The Euro remains in consolidation mode against the British Pound but a Bullish Engulfing candlestick pattern hints a bounce may be ahead. A daily close above the 23.6% Fibonacci retracement at 0.7691 exposes the 0.7751-65 area marked by the 38.2% level and the September 30 low. Alternatively, a turn below the 23.6% Fib expansion at 0.7616 opens the door for a challenge of the 38.2% threshold at 0.7556.

Risk/reward considerations argue against entering long with prices in close proximity to resistance. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.

NOTE: FXCM Inc, Parent Company of DailyFX, will raise margin requirements given volatility risk

Daily Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com