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EUR/GBP Technical Analysis: Euro Recovers to 3-Week High

EUR/GBP Technical Analysis: Euro Recovers to 3-Week High

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro Rises to Three-Week High, Tries to Break Above 0.71 Figure vs. British Pound
  • Upswing Seen as Corrective, Offering Selling Opportunity at More Attractive Levels

The Euro moved higher against the British Pound as expected after putting in a bullish Morning Star candlestick pattern coupled with positive RSI divergence and taking out falling trend resistance set from mid-October. Prices have now hit a three week high as the pair attempts to reclaim a foothold above the 0.71 figure.

Near-term resistance is at 0.7103, the 23.6% Fibonacci retracement, with a break above that on a daily closing basis opening the door for a test of the 0.7177-96 area marked by the 38.2% level and the September 22 low. Alternatively, a turn back below resistance-turned-support at 0.7054 clears the way for another challenge of the November 18 low at 0.6982.

The EUR/GBP trend has firmly favored the downside since August 2013. With that in mind, any gains from here are likely to be corrective within the context of the larger decline and represent a selling opportunity in the marking rather than something to be buying into. With that in mind, we will wait for the upswing to run its course and remain on the sidelines in the interim.

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