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EUR/GBP Technical Analysis: Two-Month Uptrend Broken

EUR/GBP Technical Analysis: Two-Month Uptrend Broken

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8631
  • Euro aims below 0.83 vs. Pound after breaking two-month uptrend
  • Partial profit booked, stop trailed after short trade hits first target

The Euro fell to a one-month low against the British Pound having established a top with the formation of a bearish Dark Cloud Cover candlestick pattern as expected. Prices have now broken a rising trend line set from late June, hinting a larger downward reversal may be in progress.

Near-term support is now at 0.8282, the 38.2% Fibonacci retracement, with a daily close below that opening the door for a test of the 0.8117-45 area (April 7 high, 50% level). Alternatively, a reversal above the 23.6% Fib at 0.8451 paves the way for a challenge of support-turned-resistance at 0.8584.

A short EUR/GBP position was activated at 0.8631. The trade hit its initial target and profit has been taken on half open exposure. The rest remains in play, looking to capture any follow-on weakness.The stop-loss has been trailed to the breakeven level (0.8631).

What do past EUR/GBP price patterns hint about where the trend is going? Find out here !

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