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Talking Points:
- EUR/GBP Technical Strategy: Flat
- Euro shows early topping signs below 0.89 vs. British Pound
- Actionable setup absent for now but positioning worth watching
The Euro is on pace to completing a Bearish Engulfing candlestick pattern after a test of resistance below the 0.89 figure, hinting a turn lower against the British Pound may be ahead. Negative RSI divergence hints at ebbing upside momentum and bolsters the case for a downside scenario.
A reversal below resistance-turned-support at 0.8773 confirmed on a daily closing basis opens the door for a test of the 38.2% Fibonacci retracement at 0.8655. Alternatively, a push above the 0.8852-72 area (January 16 high, 50% Fib expansion) paves the way for a challenge of the 61.8% threshold at 0.8926.
Current positioning does not present an actionable short trade setup for now. The Engulfing pattern needs a daily close to be confirmed and the near-term series of higher highs and lows is yet to be invalidated. However, the setup bears close monitoring for a potentially emerging entry opportunity.
What makes EUR/GBP one of the top DailyFX trades for 2017? See our forecast and find out!
