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- EUR/GBP Technical Strategy: Short at 0.8577
- Euro forms bearish reversal candle setup above 0.86 figure
- Short trade looks for dominant down trend to reassert itself
The Euro snapped a five-day winning streak against the British Pound, with a Bearish Engulfing candlestick pattern now hinting a top has formed above 0.86. The broader trend has favored the downside since prices topped below the 0.89 figure in mid-January.
Near-term support is at 0.8503, the 23.6% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of the 38.2% level at 0.8434. Alternatively, a reversal above the May 17 high at 0.8615 clears the way for a test of channel top resistance at 0.8709.
A short EUR/GBP trade from at 0.8479 was stopped out earlier in the week. Current positioning seems to offer a compelling setup to re-enter and the pair has been sold anew at 0.8577. The initial target is 0.8503 and a stop-loss will be triggered on a daily close above 0.8615.