EUR/GBP Technical Analysis: Waiting for Directional Conviction
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- EUR/GBP Technical Strategy: Flat
- Euro stalling in digestion mode after hitting monthly high vs. British Pound
- Waiting for directional conviction to emerge before committing to a trade
The Euro is in consolidation mode below the 0.79 figure after rising to the highest level in nearly a month against the British Pound. Prices began to recover having found support below the 0.76 threshold as expected after positive RSI divergence pointed to ebbing selling pressure
A daily close above support-turned-resistance at 0.7862 opens the door for a test of the 0.7609-28 area, marked by a horizontal pivot and the 61.8% Fibonacci retracement. Alternatively, a reversal below the 0.7752-75 area (trend line, 23.6% Fib expansion) paves the way for a challenge of the 38.2% barrier at 0.7695.
Positioning is inconclusive at this point. On one hand, a break of trend line resistance set from early April hints the near-term bias favors gains. On the other, the structural long-term down trend set from 2008 remains very much intact and in agreement with expected 2016 fundamentals. Opting for the sidelines seems prudent until greater clarity emerges.
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