EUR/GBP Technical Analysis: Short Trade Back in Play
To receive Ilya's analysis directly via email, please SIGN UP HERE
- EUR/GBP Technical Strategy: Short at 0.7876
- Euro breaks monthly channel resistance, hints at move above 0.79 vs. Pound
- Dominant long-term trend still points downward, painting gains as corrective
The Euro may be readying to turn lower against the British Pound after prices put in a bearish Evening Star candlestick pattern. In broader terms, the pair may be in the process of carving out a broad Head & Shoulders top after testing down trend resistance in play since December 2008.
Near-term support is at 0.7913, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of the 50% level at 0.7968. Alternatively, a push above horizontal support-turned-resistance at0.7928paves the way for another challenge of the long-term trend line, now at 0.8108.
Technical positioning agrees with a 2016 fundamental outlook calling for EUR/GBP down trend resumption and risk/reward parameters appear acceptable. With thatin mind, a short trade has been triggered at 0.7876, initially targeting the April 26 low at 0.7735. A stop-loss will be activated on a daily close above the May 4 high at 0.7947. Half of profits will be booked and the stop-loss adjusted to breakeven when prices reach the first objective.
Losing money trading EUR/GBP? This may be why!
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.