EUR/GBP Technical Analysis: Trend-Defining Support Under Fire
EUR/GBP Technical Strategy: Flat
- Euro testing trend-defining technical support against the British Pound
- Confluence of former resistance, current support is key inflection point
- Opting to wait for resolution before committing to any EUR/GBP trade
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The Euro finds itself at a decisive chart inflection point, with resolution here likely to be defining for its trend against the British Pound. Prices are sitting squarely atop rising trend support guiding the move higher since mid-April. That is reinforced by former resistance establishing the downswing from October 2017. A break below this region – now in the 0.8846-0.8900 area – would make for a convincing signal that sellers have claimed the upper hand.
Turning to the four-hour chart for a more detailed look, the pair is testing minor support in the 0.8893-95 area, with a break below that exposing the key support region. A sustained break below that opens the door for a challenge of the next downside barrier in the 0.8795-0.8815 zone. Immediate resistance is in the 0.8933-37 zone, a threshold reinforced by a falling channel top set from the September 21 swing high. Breaking above this barrier may clear the way to challenge this peak at 0.8996.
In all, current positioning does not offer adequately convincing directional cues to take a trade. On one hand, taking up the short side is unattractive from a risk/reward perspective as prices sit squarely at support. On the other, the absence of a compelling bullish reversal signal at support warns that is premature to bet on the long side. Standing aside until EUR/GBP makes up its mind at this pivotal juncture and reveals a more actionable opportunity seems most prudent.
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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.