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EUR/GBP Technical Analysis: Early Topping Signs Show Up

EUR/GBP Technical Analysis: Early Topping Signs Show Up

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro hits highest in almost 9 months, challenges potent resistance
  • RSI divergence, sentiment shift hint downside reversal may be brewing

The Euro has advanced to the highest level in nearly nine months against the British Pound but negative RSI divergence warns of ebbing upside momentum. A shift in speculative sentiment studies likewise hints that the tide may soon turn in favor of the downside.

Prices are perched at resistance marked by the 38.2% Fibonacci expansion and a rising channel top at 0.8984, with a daily close above that opening the door for a challenge of the 50% level at 0.9059. Alternatively, a reversal back below the 23.6% Fib at 0.8891 paves the way for a retest of the 14.6% expansion at 0.8834.

RSI- and sentiment-derived clues notwithstanding, the absence of a clear-cut bearish reversal signal suggests that taking up a short position is premature for now. That seems all the more prudent given the Euro’s defiance of a dovish ECB. Standing aside seems best for now.

What are the forces driving longer-term Euro and British Pound trends? Find out here !

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.