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After coming off the 2015 lows at .7012 with a 365 pip rally, EURGBP has once again come under pressure. The pair has now failed to breach .7378 on two separate occasions between March and April.
The potential double top that is best viewed on the 4 hour time frame sticks out like a sore thumb as does the break of trend line support on April 8th. Of course no double top is confirmed until the neckline is broken, leaving us in “wait and see” mode for now.
In the case of EURGBP that level comes in at the March 31st low of .7225. We will need to see a 4 hour close below this level in order to confirm the double top pattern. A move above .7378 would negate the setup.
Of course more conservative traders can wait for a daily close below the level rather than a 4 hour close. Either way we will need to see a close below the level and a retest as new resistance before considering a short entry.
But don’t expect this area around .7225 to break easily. Not only is this the neckline for the double top pattern but it’s also the March close. To be fair that price is actually .7241, but as I always say it’s best to think of these as areas of value rather than exact levels.
Summary: Watch for a 4 hour or daily close below .7225 to confirm the double top pattern. Key support comes in at .7154 and the 2015 low at .7012.