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Talking Points:
- EUR/GBP Technical Strategy: Flat
- Euro forms Shooting Star candle, hinting a top may be starting to take shape
- Confirmation of reversal needed to make for an actionable short trade setup
The Euro put in a dramatic Shooting Star candlestick following a test of resistance below the 0.91 figure against the British Pound, hinting a turn lower may be ahead. Early signs of negative RSI divergence point to fading upside momentum and bolster the case for a downside scenario.
From here, a break back below 0.8990 (14.6% Fibonacci expansion, trend line) opens the door for a test of resistance-turned-support at 0.8923. Alternatively, a breach of the 23.6% level at 0.9051 confirmed on a daily closing basis sees the next upside barrier marked by the 38.2% Fib at 0.9150.
A Shooting Star candle is a sign of indecision and does not amount to an actionable sell signal without further evidence, even with the support of RSI divergence. With that in mind, current positioning is interesting to monitor but committing to trade appears premature for the time being.
What are the forces driving longer-term Euro and British Pound trends? Find out here!
