EUR/GBP Technical Analysis: May Bottom in the Crosshairs

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Talking Points:

• EUR/GBP Technical Strategy: Flat
• Support: 0.7061, 0.6961, 0.6860
• Resistance: 0.7124, 0.7174, 0.7225

The Euro resumed its move downward against the British Pound after brief pause to consolidate, with sellers poised to test May’s swing lows. Near-term support is in the 0.7055-61 area (76.4% Fibonacci expansion, May 27 low), with a break below that on a daily closing basis exposing the 100% level at 0.6961. Alternatively, a turn above the 61.8% Fib at 0.7124clears the way for a test of the 50% expansion at 0.7174.

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