The EURGBP has rallied sharply from its recent low as visible in this D1 chart. This currency pair has now approached its horizontal resistance zone and we expect a reversal which should take it back down to its ascending support line. A breakdown should open the way lower and back down to its 200 DMA.
MACD indicates that momentum is trapped inside a narrow triangle and the histogram trades above its moving average. We expect this to reverse and witness a bearish centerline crossover. RSI is trading in overbought territory and a breakdown should fuel the correction.
We recommend a short position at 0.8575 which would be an addition to our previous short position which we took on January 14th at 0.8300. We currently do not recommend a stop buy order and will remain in this trade without a hedge.
Traders who wish to exit this currency pair at a loss are advised to place their stop loss order at 0.8700. We will not use a stop loss order and execute this trade as recommended. Place your take profit target at 0.8400.
Here are the reasons why we call the EURGBP currency pair lower
- The EURGBP has rallied sharply from its recent low and is now trading at its horizontal resistance zone
- MACD indicates that momentum is trapped and we expect a breakdown to occur and the histogram to trade below its moving average with s subsequent bearish centerline crossover
- RSI is trading in overbought territory and a breakdown should further fuel the correction
- Profit taking after a strong rally in order to realize trading profit
- New short positions by institutional swing traders
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