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EUR/GBP Technical Analysis: Key 10-Month Resistance Under Fire

EUR/GBP Technical Analysis: Key 10-Month Resistance Under Fire

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro testing trend-defining 10-month highs against the British Pound
  • Near-term chart positioning argues against re-entering a trade for now

The Euro is testing major resistance capping gains since October 2016 after establishing a foothold above the 0.91 figure against the British Pound. The single currency swooned as minutes from July’s ECB meeting disappointed imminent tapering speculation (as expected) but follow-through was conspicuously limited.

From here, a daily close above the 61.8% Fibonacci expansionat 0.9136 clears the way for a challenge of the 76.4% level at 0.9229. Alternatively, a reversal back below 0.9061 (50% Fib, rising trend line) opens the door for a retest of the 38.2% expansion at 0.8986.

The long EUR/GBP trade from 0.9067 hit its initial target and profit was booked on half of open exposure. The rest of the position was stopped out at breakeven. Prices are too close to resistance to re-enter long while the absence of bearish reversal confirmation argues against a short. Staying flat seems most prudent.

What do retail traders’ buy/sell decisions hint about Euro and British Pound trends? Find out here !

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