EUR/GBP Technical Strategy: Flat
- Euro completes Falling Wedge pattern, breaks four-month range top
- Chart setup hints a move to test resistance above 0.90 figure is ahead
- Long trade unattractive as ECB monetary policy decision approaches
The Euro maybe finally ready to make good on technical positioning arguing for gains versus the British Pound after months of procrastination. Prices completed bullish Falling Wedge chart formation and cleared four-month range resistance, opening the door for a move above the 0.90 figure.
Near-term resistance now stands at 0.9067, the 38.2% Fibonacci expansion, with a break above that on a daily closing basis clearing a path to challenge the 50% level at 0.9184. Alternatively, a move back below the 23.6% Fib at 0.8922 eyes a retest of the Wedge top at 0.8870, then a support cluster in the 0.8795-0.8806 area.
While taking up the long side is compelling on purely technical grounds, the proximity of heavy-duty event risk by way warns against such a course. The upcoming ECB monetary policy announcement carries significant disappointment risk as the markets clamor for tightening clues, hinting it is best to stand aside.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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