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Talking Points:
- EUR/GBP Technical Strategy: Flat
- Euro Resumes Recovery vs. British Pound, Probes Highest Level in 8 Months
- Waiting for Upswing to Yield Sell Signal in Line with Long-Term Down Trend
The Euro resumed its recovery against the British Pound, rising to probe the highest level in eight months. Prices are now challenging resistance below the 0.75 figure that has kept the single currency capped against Sterling since early May.
Near-term resistance is at 0.7482, the May 7 high, with a break above that on a daily closing basis opens the door for a challenge the 38.2% Fibonacci expansion at 0.7529. Alternatively, a move back below double-top resistance-turned-support at 0.7421clears the way for a test of 0.7333, the intersection of rising trend line support and the October 7 low.
Prices are too close to justify entering long from a risk/reward perspective. Furthermore, the long-term trend continues to favor the downside, suggesting the upswing since July is corrective. With that in mind, we will continue to stand aside and wait for a confirmed bearish reversal signal to trigger a short position.
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