EUR/GBP Technical Analysis: Topping in Progress Near 0.74?
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- EUR/GBP Technical Strategy: Flat
- Euro Drops Most in 3 Weeks After Being Rejected Above 0.74 Once Again
- Waiting for Risk/Reward Parameters to Align for Short Trade Opportunity
The Euro turned lower against the British Pound after brief period of consolidation, producing the largest daily decline in three weeks. Prices faltered after probing five-month highs above the 0.74 figure last week, with negative RSI divergence hinting a larger topping may be in progress.
From here, near-term support comes in at 0.7322, marked by the 23.6% Fibonacci retracement. A break below this barrier on a daily closing basis clears the way for a test of the 38.2% level at 0.7247. Alternatively, a reversal back above the 14.6% Fib at 0.7368 – now acting as resistance – opens the door for a challenge of a double top at 0.7421.
The long-term EURGBP trend continues to favor weakness and we are keen to enter a short position to take advantage of returning selling pressure. Risk/reward considerations argue against pulling the trigger just yet however. Not only are prices too close to support, but the available trading range is smaller than 20-day ATR. With that in mind, we will stand aside for now and wait for a more actionable opportunity to present itself.
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