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- EUR/GBP Technical Strategy: Flat
- Break of November rising trend support hints dominant decline may be resuming
- Proximity to support demands improved risk/reward setup before entering short
The Euro broke support guiding it higher against the British Pound through November, hinting the dominant down trend may be resuming. Prices have been locked in a choppy range since late September but a break of rising trend support after a test of the post-Brexit vote high hints the overall bias favors the downside.
Near-term support is at 0.8796, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of the 0.8728-46 area (September 27 low, 50% level). Alternatively, a move back above the November 21 lowat 0.8842 exposes the 23.6% Fib at 0.8879 for a retest.
The entry order to sell EUR/GBP at 0.8878 was activated but the trade stopped out before the expected down move was realized. Prices are now too close to support to justify re-entering the trade from a risk/reward perspective and waiting on the sidelines for a better setup seems prudent.