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- EUR/GBP Technical Strategy: Short at 0.8357
- Support: 0.8325 (23.6% Fib ret.), 0.8293 (38.2% Fib ret.)
- Resistance: 0.8377 (Mar 13 high)
We sold the Euro against the British Pound at 0.8357 after prices produced a bearish Dark Cloud Cover candlestick pattern, hinting at a reversal downward. Follow-through is yet to materialize but the setup remains valid from a technical perspective. Furthermore, negative RSI divergence continues to argue in favor of a downside scenario.
We will continue to hold the trade for now, looking for the 23.6% Fibonacci expansionat 0.8304 as an initial target. Breaking below this barrier would expose the next objective at 0.8259, the 38.2% level. A stop-loss will be activated on a daily close above 0.8377, the March 13 high. Profit on half of the position will be booked at 0.8304, at which point the stop-loss on the remainder will be trailed to the breakeven mark.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com