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EUR/GBP Technical Analysis: Aiming Below 0.84 Figure

EUR/GBP Technical Analysis: Aiming Below 0.84 Figure

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8462
  • Euro breaks range floor, drops to 6-week low vs. Pound
  • Sellers now aiming to test the water below 0.84 figure

The Euro managed to break below January’s swing bottom against the British Pound, hinting that sellers are preparing to test the water below the 0.84 figure. In broader terms, the breakdown suggests that the down trend initially launched in early October 2016 may be resuming after a two-week pause.

From here, a daily close below support in the 0.8334-70 area (September 6 low, 50% Fibonacci expansion) opens the door for a challenge of the 61.8% level at 0.8256. Alternatively, a reversal back above the 38.2% Fib at 0.8484 paves the way for a retest of the 0.8624-43 zone (23.6% expansion, February 6 high).

Risk/reward considerations appear acceptable and a short position has been activated at 0.8462, initially targeting 0.8370. A stop-loss will be activated on a daily close above 0.8506. Profit on half of the position will be taken and the stop moved to breakeven upon hitting the first objective.

What makes EUR/GBP one of the top DailyFX trades for 2017? See our forecast and find out!

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