EUR/GBP Technical Analysis: Down Move Gains Momentum
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- EUR/GBP Technical Strategy: Short at 0.9169
- Euro rejected lower after testing post-Brexit vote resistance above 0.93 mark
- Short trade activated as two-month trend line support break hints at reversal
The Euro turned sharply lower against the British Pound after breaking rising trend line support guiding prices upward since mid-July, as expected. Strong UK CPI data was followed by impressively hawkish rhetoric from the Bank of England, accelerating a reversal from the post-Brexit referendum high below 0.93.
From here, a daily close below the 50% Fibonacci retracement at 0.8810 opens the door for a test of the 61.8% level at 0.8693. Alternatively, a turn back above the 38.2% Fib at 0.8927 – now recast as resistance – initially paves the way for a retest of the September 12 low at 0.8983.
The short EUR/GBP position activated at 0.9169 hit its initial target and profit on half of the trade has been booked. The remaining portion of the trade continues to be in play to capture follow-on weakness. The stop-loss has been adjusted to the breakeven level.
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