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EUR/GBP Technical Analysis: Pound Struggling to Extend Gains

EUR/GBP Technical Analysis: Pound Struggling to Extend Gains

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8994
  • Euro spikes to 3-month low vs. Pound but breakout fails to hold
  • Positive RSI divergence may be hinting at ebbing selling pressure

The Euro spiked down to the lowest level in three months against the British Pound but prices failed to secure a lasting break of a narrow congestion range. Positive RSI divergence warns that selling pressure may be ebbing and hints a bounce may be ahead, but clear-cut confirmation of reversal is absent for now.

Near-term support is at 0.8460, the November 24 low, with a break below that on a daily closing basis opening the door for a test of the September 6 swing bottom at 0.8334. Alternatively, a reversal above the 76.4% Fibonacci retracement at 0.8544 sees the next upside barrier at 0.8674, the 61.8% level.

Partial profit was booked on a short EUR/GBP position set to trigger at 0.8994 after prices met the trade’s first objective. The rest of open exposure remains in play, looking to take advantage of continued weakness. The stop-loss has been adjusted to the breakeven level.

What fundamental trends will impact the Euro and Pound through year-end? Find out here !

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