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Talking Points:
- EUR/GBP Technical Strategy: Short at 0.8896
- Euro may be resuming down trend started in late August vs British Pound
- Short position initially aims for a challenge of support above the 0.88 figure
The Euro has broken support guiding the upswing from September lows, hinting that the down trend started in late August against the British Pound may be resuming. A set of bearish candlestick patterns and negative RSI divergence appear to have marked a top, as suspected.
From here, a daily close below the 38.2% Fibonacci expansion at 0.8819 opens the door for a test of the 0.8743-53 area (July 14 low, 50% level). Alternatively, a move back above support-turned-resistance at 0.8934 (October 9 close) paves the way for another challenge of 0.9033 (October 12 high).
A short EUR/GBP position was activated at 0.8896, initially targeting 0.8819. A stop-loss will be activated on a daily close above 0.8934. Profit on half of the trade will be booked and the stop-loss trailed to breakeven when (and if) the first objective is reached.
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