EUR/GBP Technical Analysis: Digesting After Flash Crash Spike
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- EUR/GBP Technical Strategy: Flat
- Euro spikes to seven-year high above 0.92 figure versus British Pound
- Waiting for actionable trade setup, risk/reward parameters to enter trade
The Euro has paused to digest gains after rapidly spiking to the highest level in seven years against the British Pound. Sterling suffered a “flash crash”, sinking against all of the majors in a move seemingly driven by hard Brexit fears amplified the influence of algorithmic trading in thin liquidity conditions.
Near-term resistance is now at 0.9050, the 61.8% Fibonacci expansion, with a break above that on a daily closing basis opening the door for another test of the 76.4% level at 0.9220. Alternatively, a reversal below the 50% Fib at 0.8914 targets the 0.8725-77 area (August 16 high, 38.2% expansion, rising trend line).
An actionable trade setup is absent at this time. On one hand, prices are too close to resistance to justify entering long from a risk/reward perspective. On the other, the absence of a defined bearish reversal signal suggests taking up the short side is premature.
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