EUR/GBP Technical Analysis: Has the Long Term Uptrend Resumed?
EUR/GBP Technical Strategy: Flat
- Euro rises to the highest in nearly a year against British Pound
- Ten-month range top break hints long-term uptrend is resuming
- Risk/reward setup, shorter-term chart warn against long trade
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The Euro continues to gain ground against the British Pound, with five days of consecutive gains bringing it to the highest level in almost a year. A breach above the range top containing price action since mid-October 2017 seems to suggest that the dominant uptrend started in November 2015 is resuming.
Resistance is now at 0.9103, the 50% Fibonacci expansion, with a break above that confirmed on a daily closing basis opening the door for a challenge of the 0.61.8% level at 0.9152. Alternatively, a move back below the 38.2% Fib at 0.9055 paves the way for a retest of the 0.9007-31 area.
Still, entering long seems premature. First, prices are too close to immediate resistance to justify the trade on risk/reward grounds. Second, a look at the four-hour chart reveals a bearish Dark Cloud Cover candlestick pattern, which may precede a pullback. On balance, standing aside seems most prudent for now.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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