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EUR/GBP Technical Analysis: Making Good on Candle Setup?

EUR/GBP Technical Analysis: Making Good on Candle Setup?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.7876
  • Euro edging cautiously lower after finding resistance above 0.79 figure
  • Short position remains in play, targeting return to April swing bottom

The Euro is slowly edgingdownward against the British Pound having seemingly marked a top with the formation of a bearish Evening Star candlestick pattern. Longer term, prices may be carving out a Head and Shoulders top marking the resumption of the structural down trend in play since December 2008.

A daily close below the 0.7683-0.7713 area – bracketed by the 38.2% Fibonacci retracement and a range floor in play since early February – exposes the 50% level at 0.7549. Alternatively, a reversal above horizontal pivot resistance at 0.7928 paves the way for a test long-term trend line resistance, now at 0.8105.

A short EUR/GBP trade was triggered at 0.7876, initially targeting the April 26 low at 0.7735. A stop-loss will be triggered on a daily close above the May 4 high at 0.7947. Half of the position will be closed and the stop-loss adjusted to the breakeven level once the first target is reached.

What do FXCM traders expect from the Euro and the British Pound? Find out here !

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