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EUR/GBP Technical Analysis: Double Top Taking Shape?

EUR/GBP Technical Analysis: Double Top Taking Shape?

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Bearish Dark Cloud Cover Candlestick Pattern Hints Euro May Be Topping
  • Waiting to Enter Short Pending Confirmation, Better Risk/Reward Parameters

The Euro put in a bearish Dark Cloud Cover candlestick pattern, hinting a double top may be forming below the 0.75 figure against the British Pound. Confirmation of a reversal is absent for now however and would require a breach of rising trend line support set from early August.

Sellers now aim to challenge the intersection of the 23.6% Fibonacci retracement and the aforementioned trend line at 0.7360. A break below this boundary on a daily closing basis opens the door for a test the 38.2% level at 0.7278. Alternatively, a push above the May 7 high at 0.7482 clears the way for a challenge of the 38.2% Fib expansion at 0.7529.

We are keen to enter short EURGBP once an actionable entry opportunity to trade in line with the long-term down trend emerges. Pulling the trigger now seems unattractive however, with prices’ close proximity to support skewing risk/reward parameters against the trade. With that in mind, we will remain on the sidelines and wait for a better-defined setup to present itself.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.