The euro has steadily climbed against sterling after making a key low on March 11th at .70135. This is the biggest rally we have seen since the summer of 2013. While the bearish trend has been firmly in place over the past two years, a rebound was overdue. The decline from the 2013 high of .88139 to the low made last fall around the .7765 saw price recover to the 23.6% Fibonacci retracement before bottoming out just before the .70 handle.
Currently the EUR/GBP 4-hour chart is showing that the recent rally is forming a tentative bearish Gartley pattern. Point D is confirmed with the 61.8% Fibonacci retracement of the X to A leg and 161.8% Fibonacci expansion level of the B to C move.
If the bearish pattern is invalidated, the next key resistance level will come from .7438, which is the 23.6% Fibonacci retracement level of the 2013 high to this year’s low move.
The trade: Sell EURGBP at .7375 with a stop loss at .7475 and a take profit at .7075. The Risk/Reward Ratio is around 1: 3
Edward J. Moya
WorldWideMarkets Online Trading