EUR/GBP Technical Analysis: Double Top Taking Shape Below 0.89?

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Talking Points:

• EUR/GBP Technical Strategy: Flat
• Euro may be forming double top below 0.89 vs British Pound
• Further confirmation sought before entering short position

The Euro put in a bearish Dark Cloud cover candlestick pattern, hinting a double top may be taking shape below the 0.89 level versus the British Pound. Negative RSI divergence points to ebbing upside momentum and bolsters the case for a downside scenario.

A daily close below resistance-turned-support at 0.8787 (March 13 high) opens the door for a test of 0.8717 (June 16 low). Alternatively, a push above the 0.8848-52 area (January 16 high, 23.6% Fibonacci expansion) paves the way for a challenge of the 38.2% level at 0.8929.

Prices are sitting squarely at near-term support, arguing against entering short from a risk/reward perspective. Opting to wait for further confirmation seems most prudent for the time being until an actionable selling opportunity presents itself.

What makes EUR/GBP one of the top DailyFX trades for 2017? See our forecast and find out!