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EUR/GBP Technical Analysis: Euro Recovery in the Cards?

EUR/GBP Technical Analysis: Euro Recovery in the Cards?

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.9169
  • Negative RSI divergence hints that a Euro bounce vs British Poundmay be ahead
  • Bearish near-term trend, absence of bullish confirmation keep short trade in play

The Euro is digesting losses having fallen to the lowest level in over two months against the British Pound, with positive RSI divergence hinting a rebound may be ahead. The near-term trend continues to be defined by a series of lower highs and lows however, meaning the path of least resistance favors the downside.

From here, a daily close below the September 27 low at 0.8746 opens the door for a test of 0.8696, the 38.2% Fibonacci expansion. Alternatively, a push above the 23.6% Fib retracement at 0.8879 sees the next upside barrier at 0.8960, marked by the 38.2% retracement line.

A short EUR/GBP position was triggered at 0.9169 and partial profit was booked on hitting the first objective. RSI divergence is not an actionable bullish signal without further confirmation so remaining exposure will remain in play, looking to capture down trend resumption. The stop-loss is now at breakeven.

What makes EUR/GBP one of our top trading ideas for 2017? Find out here !

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