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EUR/GBP Technical Analysis: A Major Top in Place?

EUR/GBP Technical Analysis: A Major Top in Place?

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Pending short at 0.8431
  • Euro may be carving out a major top against the British Pound
  • Corrective bounce sought to improve risk/reward for short trade

The Euro may have put in a major top against the British Pound after suffering the largest daily drop in three months following the announcement of a snap UK election. Prices may be on the verge of completing a large Head and Shoulders topping pattern that would imply a move below the 0.75 figure ahead.

Support is now at 0.8334, a double bottom, with a break below that on a daily closing basis opening the door for a test of the July 14 swing low at 0.8251. Alternatively, a move back above support-turned-resistance at 0.8403, the February 22 low, exposes 0.8480 (trend line, March 31 low).

Prices are too close to near-term support to justify entering short from a risk/reward perspective. As such, an entry order has been set up to sell at 0.8431. If triggered, the trade will initially target a return to 0.8334 and carry a stop-loss activated on a daily close above 0.8480.

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.