EUR/GBP Technical Strategy: Flat
- Euro down move stalls below 0.89 figure after reversal near 0.91
- Trend turn signal inconclusive, former resistance holds as support
- Waiting for clarity, improved risk/reward setup to enter position
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The Euro has stalled at support below the 0.89 figure against the British Pound following an expected drop after the appearance of a bearish Dark Cloud Cover candlestick pattern. That down move broke support guiding the uptrend mid-June, seemingly arguing for bearish continuation. A push through the 0.8881-0.8873 area may open the door to challenge the 0.8798-0.8815 region.
A look at the daily chart warns against entering short too readily however. Prices appear to be wedged between former support recast as resistance and a former upside barrier guiding the down move since mid-October 2017, itself now reframed as a downside hurdle.
This makes for inconclusive positioning. On one hand, the recent support break argues for weakness. On the other, a longer-term upside reversal is yet to be invalidated. In either case, prices are too close to support to make a short trade appealing from a risk/reward perspective. Staying flat seems prudent for now.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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