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Talking Points:
- EUR/GBP Technical Strategy: Short at 0.7876
- Euro corrects higher as expected, challenging trend-defining resistance
- Gains seen as corrective within larger down move, short trade still in play
The Euro corrected sharply higher against the British Pound as expected, making good on technical cues indentified earlier in the week. Prices now stand squarely at trend line resistance defining the down move since early April, with behavior here likely to establish the dominant bias in the near term.
A close above the intersection of the trend line and the 38.2% Fibonacci retracement at 0.7776 sees the next upside barrier at 0.7841, the 50% level. Alternatively, a reversal back below the 23.6%Fib at 0.7695 opens the door for a retest of the 14.6% retracement at 0.7645.
A short EUR/GBP position was established at 0.7876 and partial profits taken after the trade met its first objective. Overall positioning continues to argue in favor of the downside and remaining exposure will remain in play. The stop-loss is now at the breakeven level.
What do DailyFX analysts expect for the Euro and Pound in 2016? Find out here !
