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EUR/GBP Technical Analysis: Five-Day Win Streak Broken

EUR/GBP Technical Analysis: Five-Day Win Streak Broken

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Talking Points:

  • 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.

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.