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EUR/GBP Technical Analysis: Topping at 14-Month Highs?

EUR/GBP Technical Analysis: Topping at 14-Month Highs?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro chart positioning hints at topping near 14-month high vs. British Pound
  • Waiting for reversal confirmation to enter short in line with long-term trend

The Euro may be carving out a top after prices put in a bearish Harami candlestick pattern after touching a 14-month high against the British Pound. The emergence of negative RSI divergence points to ebbing upside momentum and reinforces the case for a downside scenario.

Near-term resistance-turned-support is at 0.7821, with a break below that on a daily closing basis opening the door for a test of another horizontal price pivot at 0.7703. Alternatively, a push above the 23.6% Fibonacci expansion at 0.7912 paves the way for a challenge of the 38.2% level at 0.8046.

We are keen to find an opportunity to enter short EUR/GBP in line with our 2016 fundamental outlook. A Harami pattern amounts to a relatively flimsy signal however and requires further confirmation to be actionable. With that in mind, we will opt for patience and observe from the sidelines for the time being.

Should you follow when FXCM traders buy and sell the Euro? Find out here!

EUR/GBP Technical Analysis: Topping at 14-Month Highs?

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