EUR/GBP Technical Analysis: Down Trend Back in Play?
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- EUR/GBP Technical Strategy: Pending short at 0.8479
- Euro breaks support, may be resuming down trend vs. Pound
- Longer-term Head and Shoulders top may yet be validated
The Euro broke below support guiding it higher against the British Pound for three weeks, hinting that the down trend started in mid-March may be resuming. Longer-term, prices may be in the process of carving out a large Head and Shoulders top chart formation.
A daily close below the 0.8403-19 area (February 22 low, 23.6% Fibonacci expansion) exposes the 0.8334-50 zone (triple bottom, 38.2% level). Alternatively, a push above 0.8494 (38.2% Fib retracement, trend line support-turned-resistance) opens the door for a test of the 50% threshold at 0.8550.
Prices are too close to support to justify entering short immediately. An entry order has been established to sell EUR/GBP at 0.8479. If triggered on a bounce, the trade will initially aim for a return to 0.8419 and carry a stop-loss activated on a daily close above 0.8509, the May 5 high.
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