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EURGBP – Euro/Pound Reverses Lower at Event Area Resistance
Following a multi-year run higher, the EURGBP topped out in October 2016 and has been trending lower since. In the daily chart below, you will notice two giant event areas that formed as this market changed direction and that price recently experienced a ‘vacuum’ back up to test these areas. We have a confluence of two factors that support our current bearish bias under 0.8850 resistance area: An obvious strong resistance area at the previously mentioned event areas which are now containing the market, and an approximate 50% retrace of the initial swing lower, both of which we can see below. For bears, it all depends on the ‘line in the sand’ at 0.8850; if price is below that containment level, we expect the market to trade lower. We are looking to be sellers on any pockets of strength and we would hold short positions until a strong break or close back above 0.8850. Downside targets are near 0.8340 or potentially even lower.
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