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EUR/GBP Technical Analysis: Pivotal Trend Line in Focus

EUR/GBP Technical Analysis: Pivotal Trend Line in Focus

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro pulls back from 14-month high, sets sighs on pivotal trend line support
  • Waiting for confirmation of down trend resumption to trigger short position

The Euro pulled back against the British Pound as expected after prices spiked to the highest level in 14 months falling just shy of the 0.79 figure. Prices now eye critical support guiding the rebound since mid-November, with behavior here potentially pivotal for near-term trend development.

Near-term support is at 0.7703, the intersection of a former resistance level and a rising trend line defining the Euro’s recovery over the past three months. A daily close below this barrier exposes the 0.7526-47 area, marked by the January 22 low and the 38.2% Fibonacci retracement. Alternatively, a push above the 14.6% Fib expansion at 0.7830 paves the way for a test of the 23.6% level at 0.7912.

We continue to look for opportunities to enter short EUR/GBP in line with our 2016 fundamental outlook. Adequate confirmation of long-term down trend resumption is absent for now however. We will wait for a close below trend line support to position for a trade.

What does Euro positioning tell us about where it is going? Find out here !

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