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EUR/GBP Technical Analysis: Euro Recovery Ready to Begin?

EUR/GBP Technical Analysis: Euro Recovery Ready to Begin?

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro forms bullish candle pattern at key support, hinting at a bounce ahead
  • Falling Wedge setup bolsters the bullish argument but confirmation needed

Euro chart positioning hints it may be preparing to turn higher after touching the lowest level in seven months against the British Pound. The appearance of a bullish Piercing Line candlestick pattern hints an upturn is ahead. Prices have also carved out a Falling Wedge formation, which typically carries bullish implications.

A daily close above the 0.8783-0.8806 area (23.6% Fibonacci expansion, former support) opens the door for a challenge of 0.8923 (Wedge top, 38.2% Fib retracement). Alternatively, a move below the 38.2% expansion at 0.8693 sees the next downside barrier marked by the 50% threshold at 0.8620.

Prices are too close to resistance to justify entering a long position from a risk/reward perspective. Furthermore, the very near term down trend in play over the past two weeks is yet to be conclusively invalidated. With that in mind, opting to stand aside seems prudent for the time being.

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