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Talking Points:
- EUR/GBP Technical Strategy: Flat
- Euro Breaks Lower from Consolidation Range Against British Pound
- Risk/Reward Considerations Argue Against Taking Short Position
The Euro broke downward against the British Pound, with sellers now attempting to engineer a breach back below the 0.72 figure. Prices have been locked in a choppy consolidation range having found resistance above the 0.74 mark in late August.
From here, a break below the 38.2% Fibonacci expansion at 0.7210 on a daily closing basis opens the door for a challenge of the 50% level at 0.7145. Alternatively, a move back above the support-turned-resistance in the 0.7244-72 area clears the way for testing a falling trend line that has capped gains for the past month, now at 0.7337.
A compelling trade setup is absent for the time being. Prices are sitting squarely on support, meaning a short trade appears to be unattractive from a risk/reward perspective. We will remain flat for the time being, waiting for a better-defined selling opportunity to emerge.
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