The EURGBP could be gearing up for a push higher.
I discussed this short-term descending channel in Saturday’s video.
Notice how the pair has been hovering just above channel support since the September 13 selloff.
EURGBP also closed below the 0.8840 horizontal level last Thursday.
However, selling the pair down here may not be a great idea.
This is where something as simple as a channel can be incredibly helpful.
Not only can you use them to identify entries, but they can also help you avoid selling low and buying high.
Of course, we always want to do the opposite.
If you saw Saturday’s post, you know I’m not interested in selling EURGBP until we see a retracement of some sort.
Whether that’s an immediate retest of 0.8920 resistance or a more gradual move up into channel resistance (or both) is anyone’s guess.
But I do think that selling down here is risky.
That doesn’t mean EURGBP won’t continue to slide along channel support as it has since the 13th.
That’s a very real possibility.
However, I would prefer to sell at higher prices as it increases the potential reward.
A rotation into 0.8920 would also allow EURGBP to reset.
It would flush out the weaker hands and attract a new group of sellers for the next leg lower.
That’s the ideal scenario, at least for me.
Regardless of whether we get a 0.8920 retest, I favor selling EURGBP as long as the pair is trading within this descending channel.
That’s nothing new, though.
I’ve favored EURGBP shorts since the pair topped out in mid-August.
As for key support on the way down, we have 0.8760 followed by 0.8680.
Watch the latest Weekly Forex Forecast video for all the details.