EUR/GBP Technical Analysis: Trend Reversal in Progress?
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- EUR/GBP Technical Strategy: Flat
- Euro drops most in a month after forming bearish candlestick pattern
- Waiting for downturn confirmation to pull the trigger on short trade
The Euro moved sharply lower against the British Pound, with prices putting in the largest daily decline in a month. The move downward followed the formation of a Bearish Engulfing candlestick pattern below rising channel resistance in play since early March.
Near-term support is in the 0.7928-51 area, marked by February 25 high, the channel floor and the 14.6% Fibonacci retracement. A break below that on a daily closing basis exposes the 23.6% level at 0.7849. Alternatively, a reversal back above the 38.2% Fib expansion at 0.8014 sees the next upside barrier in the 0.8126-44 zone (50% expansion, channel top).
We are keen to enter short EUR/GBP in line with our 2016 fundamental outlook. Confirmation of reversal is absent for now absent the break of the near-term series of higher highs and lows. With that in mind, we will monitor price action for follow-through and wait for a better-defined selling opportunity.
Where is the Euro going in the second quarter? See our forecast here !
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