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EUR/GBP Technical Analysis: 2-Month Down Trend Broken

EUR/GBP Technical Analysis: 2-Month Down Trend Broken

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro rebounds to break two-month trend line resistance
  • Longer-term H&S topping pattern might still play out

The Euro recovered to a weekly high against the British Pound, breaking trend line resistance that had contained the upside since mid-March. This returns prices to levels prevailing after the first round of the French presidential election just the runoff looms ahead.

Near-term resistance is now at 0.8494, the 38.2% Fibonacci retracement. A daily close above that exposes the 50% level at 0.8550. Alternatively, a reversal back below trend line resistance-turned-support at 0.8473 opens the door for a back toward 0.8403.

The break of trend line resistance warns that the near-term directional bias may have shifted. With that in mind, the short EUR/GBP trade triggered at 0.8497 has been closed at breakeven. The possibility of a large Head and Shoulders top remains, but an actionable entry opportunity seems to be absent.

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.