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Talking Points:
- EUR/GBP Technical Strategy: Short at 0.7876
- Euro drops most in 7 months, takes out April low vs. British Pound
- Prices poised to confirm major Head & Shoulders topping pattern
The Euro plunged against the British Pound, issuing the largest one-day drop in seven months and taking out April’s swing bottom. Prices sit within a hair of confirming a large Head and Shoulders topping pattern that may mark the end of the upswing from mid-November and the resumption of the long-term decline in play since late 2008.
Near-term support is at 0.7683, the 38.2% Fibonacci retracement, with a break below that on a daily closing basis opening the door for a test of the 50% level at 0.7549. The first significant level of resistance comes in at 0.7849, the 23.6% Fib, with a reversal back above that paving the way for a challenge of a horizontal pivot at 0.7928.
A short EUR/GBP position was entered at 0.7876.The trade has now hits its initial target at 0.7735 and profits have been booked on half of exposure. The remainder will stay open to capture any further weakness. The stop-loss has been adjusted to the breakeven level.
Losing money trading EUR/GBP? This might be why.
