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EUR/GBP Technical Analysis: Euro Uptrend Set to Accelerate?

EUR/GBP Technical Analysis: Euro Uptrend Set to Accelerate?

Ilya Spivak,

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro testing trend-defining resistance vs. Pound as recovery accelerates
  • Breakout confirmation needed to make for an actionable long trade setup

The Euro returned to the offensive against the British Pound as expected, with prices now challenging a trend-defining technical resistance threshold. The pair advanced after putting in a bullish Piercing Line candlestick pattern. The formation of a Rising Wedge chart setup typically carries broadly bullish implications.

Pivotal resistance comes in at 0.8922 (Wedge top, 23.6% Fibonacci expansion), with a break above that confirmed on a daily closing basis opening the door to challenge the 38.2% level at 0.9067. Alternatively, a move back below former resistance at 0.8806 exposes the January 25 low at 0.8687 anew.

Prices are too close to resistance to justify entering long from a risk/reward perspective. Furthermore, the Wedge setup needs confirmation on a close above its upper boundary to be actionable. Meanwhile, taking the short side without a viable reversal signal seems premature. On balance, staying flat seems prudent.

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