EURGBP – Euro/Pound Weakens after Running Into Key Resistance Area
After a multi-year run higher, the EURGBP topped out in October 2016 and has been trending lower since. In the daily chart below, you will notice two areas that I refer to as event areas (areas where a major price move originated from) that formed as this market changed direction; notice that this market recently experienced a ‘vacuum’ back up to test these areas. We have a confluence of two factors that support our current bearish bias under 0.8850 resistance area: Obvious strong resistance area at the previously mentioned event areas which are now containing the market, and an approximate 50% retrace of the initial swing lower, both of which we can see below. For bears, it all depends on the ‘line in the sand’ at 0.8850; if price is below that containment level, we expect the market to trade lower. We are looking to be sellers on any pockets of strength and we would hold short positions until a strong break or close back above 0.8850. Downside targets are near 0.8340 or potentially even lower.
Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 17,000+ students since 2008. Checkout Nial’s Blog – Learn To Trade The Market.