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EUR/GBP Technical Analysis: Preparing to Reverse Lower?

EUR/GBP Technical Analysis: Preparing to Reverse Lower?

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro treading water after hitting two-year high vs. British Pound
  • Negative RSI divergence hints at a pullback may be coming ahead

The Euro is treading water against the British Pound after jumping to the highest level in over two years following the UK “Brexit” referendum. Negative RSI divergence hints at ebbing upside momentum however, hinting that a pullback may be in the cards ahead.

A daily close above the 23.6% Fibonacci expansion at 0.8390 opens the door for a test of the 38.2% level at 0.8504. Alternatively, a reversal below the 23.6% Fib retracement at 0.8195 paves the way for a challenge of the 38.2% threshold at 0.8081.

RSI divergence is insufficient to justify entering a short position without further confirmation, particularly considering the intensity of the latest topside surge. Opting to remain on the sidelines seems prudent for now, waiting for price action to deliver a more actionable opportunity in the days ahead.

Track key short-term EUR/GBP levels and trading patterns with the GSI indicator !

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