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On Thursday of last week I commented about the potential double top that was forming on EURGBP. At the time, the pattern had not yet confirmed with a move below .7225, which left us in “wait and see” mode.
Yesterday’s session gave us the close needed to confirm the pattern. In fact the session provided traders with two options to go short. The first option came on a 4 hour close below the level, which occurred at 9am EST. The very next 4 hour candle produced a bearish rejection of .7225 as new resistance.
The second opportunity has just presented itself on a daily close below the level. Of course if you were not able to get in on the 4 hour close it may be prudent to wait for a retracement back to the .7225 area before considering an entry. This will give you a more favorable risk to reward ratio.
To the downside we have two levels that could come into play as support over the coming sessions. The first is .7154, which was carved out by the highs on March 13th and 16th and subsequently acted as support on March 19th.
The second and more obvious support level is the multi-year low at .7013. This will of course will be a much harder level to break than .7154.
Do note that we have GBP CPI at 4:30am EST, so be sure to take this into consideration when planning your entry.
Summary: Opportunity to sell EURGBP on a move back to the area between .7217 and .7225 if you did not get in on the 4 hour retest. Key support comes in at .7154 and .7013.
