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Talking Points:
- EUR/GBP Technical Strategy: Flat
- Euro puts in bearish candle pattern, hinting a top may be in the works
- Adverse risk/reward, absence of confirmation argue against taking short
The Euro put in a bearish Dark Cloud Cover candlestick pattern after hitting a two-month high against the British Pound, hinting a move lower may be ahead. Follow-through has been lackluster so far however, with prices locked in a narrow range near the 0.87 figure.
Near-term support is at 0.8696, the 23.6% Fibonacci retracement, with a daily close below that opening the door for a test of the 38.2% level at 0.8640. Alternatively, a push above the 23.6% Fib expansion at 0.8754 sees the next upside barrier at 0.8810, the 38.2% threshold.
Current positioning does not seem to offer an attractive trading opportunity. The available trading range is too narrow to justify taking on exposure from a risk/reward perspective. Furthermore, the bearish reversal is yet to be confirmed with a clear break of the near-term uptrend. On balance, holding flat seems best for now.
What makes EUR/GBP one of the top DailyFX trades for 2017? See our forecast and find out!
