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EUR/GBP Technical Analysis: Ready to Test Below 0.84?

EUR/GBP Technical Analysis: Ready to Test Below 0.84?

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8461
  • Euro bounces sharply higher after hitting 2-month low vs. British Pound
  • Overall bias favors weakness, sellers aiming at long-standing double bottom

The Euro recoiled sharply higher after hitting the weakest level in two months against the British Pound but overall positioning still seems to favor the downside. Continued selling from here puts the spotlight on a major double bottom capping losses since early September 2016.

Near-term support is in the 0.8334-70 area (double bottom, 50% Fib expansion), with a daily close below that exposing the 61.8% level at 0.8257. Alternatively, a turn back above the 38.2% Fib at 0.8484 opens the door for a retest of rising trend line support-turned-resistance, now at 0.8568.

An order to enter short at 0.8461 has been triggered. The trade initially targets 0.8370, with a stop-loss set to trigger on a daily close above 0.8506. Profit on half of the position will be taken and the stop moved to breakeven when the first objective is reached.

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.