EUR/GBP Reverses at Resistance. Embark on A Short Forex Trade?
Skerdian Meta • 1 min read
EUR/GBP has made quite a reverse in the last few sessions, but it faces a tough level on top. Judging by the current price action, it looks like EUR/GBP buyers are giving up here, or I better say, they have already closed their forex trades.
The retrace up seems to be done.
The Euro has climbed 70 pips since Friday afternoon, while the British Pound has lost around 170 pips during this time. This has sent EUR/GBP 140 pips higher. EUR/GBP is less volatile, so the pips in both EUR/USD and GBP/USD don’t exactly add up in EUR/GBP.
Anyway, EUR/GBP climbed to 0.8840 an hour ago. This area, stretching from 0.8840 to 0.8860s, has been providing resistance for more than a week. It used to be in support two weeks ago, so we can consider this an important level for short-term forex trades.
As you can see, there are a number of moving averages clustered there. They will likely provide solid resistance if the buyers get funny ideas and decide to push higher. The stochastic indicator is also overbought on this timeframe chart. This means that the retrace higher is done and the downtrend is about to resume.
I’m looking at this forex pair. If this H4 candlestick closes as it is now, that will be another bearish signal. The trade would be to sell around 0.8830-40 with a stop above 0.8870 and an open take profit.