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EUR/GBP Technical Analysis: Early Topping Signs Emerging

EUR/GBP Technical Analysis: Early Topping Signs Emerging

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro shows early topping signs below 0.89 vs. British Pound
  • Actionable setup absent for now but positioning worth watching

The Euro is on pace to completing a Bearish Engulfing candlestick pattern after a test of resistance below the 0.89 figure, hinting a turn lower against the British Pound may be ahead. Negative RSI divergence hints at ebbing upside momentum and bolsters the case for a downside scenario.

A reversal below resistance-turned-support at 0.8773 confirmed on a daily closing basis opens the door for a test of the 38.2% Fibonacci retracement at 0.8655. Alternatively, a push above the 0.8852-72 area (January 16 high, 50% Fib expansion) paves the way for a challenge of the 61.8% threshold at 0.8926.

Current positioning does not present an actionable short trade setup for now. The Engulfing pattern needs a daily close to be confirmed and the near-term series of higher highs and lows is yet to be invalidated. However, the setup bears close monitoring for a potentially emerging entry opportunity.

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.