EUR/GBP Technical Analysis: Euro Uptrend Struggling to Extend
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EUR/GBP Technical Strategy: Flat
- Euro struggles for direction after dropping back to trend support
- Upward bias remains intact but follow-through now looks suspect
- Technical resolution, improved risk/reward setup needed to trade
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The Euro is struggling to find lasting upside follow-through against the British Pound but the bounds of the near-term uptrend remain intact. A would-be breakout foundered as prices turned lower after showing a bearish Dark Cloud Cover candlestick pattern on the four-hour chart, as expected.
Turning to the daily chart, the pair is wedged between rising trend support set from mid-June – where the outer layer is now at 0.8974 – and an inflection point marked by the October 2017 high at 0.9033. A break lower exposes the 0.8938-46 area (August 31 low, 38.2% Fibonacci retracement). Alternatively, a push above resistance targets the 0.9091-99 area (August 28 high, 38.2% Fib expansion).
Current positioning does not offer an attractive trade opportunity. Perhaps most importantly, congested price action makes even shorter-term tactical bets appear unattractive on risk/reward grounds. Opting to remain flat seems prudent until better-defined opportunity presents itself.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.