EURGBP – Euro Remains A Sell Against British Pound?

The Euro enjoyed a good ride against the British Pound during the past few weeks as it traded close to the 0.7900 level where it found sellers. The EURGBP pair started to move inside a range after trading near the stated level. There is a breakout pattern forming, which can be clearly seen from the daily chart of the EURGBP pair, which may act as a major catalyst for the next move in the near term. There is a chance of the EURGBP pair heading down if sellers gains traction.
I think the Euro may remain under a bearish pressure in the short term, and that is the reason why we can consider looking for a sell trade. We can drop on to a lower timeframe chart to search for possible sell opportunities.

Technical Analysis
D1 – If we look at the daily chart, then as mentioned there is a range breakout pattern forming. The chart depicts the EURGBP pair moving down and then later breaking the support area for a larger move down.

Sell Entry:
H1 – If we look at the hourly chart of the EURGBP pair, then we can notice that the pair dropped recently in two waves to trade near 0.7770 levels. So, there is a possibility that the EURGBP pair corrects in two waves higher before finding sellers. We can enter a sell trade if the pair moves as per the plan in two waves up, make a stop around the 0.7820-40 resistance area and forms a bearish divergence.

Target 1: 0.7750
Target 2: 0.7720
Stop Loss: 15 pips + above the last high created before entering the trade.

Fundamentals events and Economic news to watch out
A major news that hit the wires was that JP Morgan Cazenove downgraded their outlook on euro zone equities from overweight to neutral.
According to a report on Reuters, JP Morgan strategist Mislav Matejka, stated “We reiterate our recent downgrade of Japan, and also downgrade Eurozone, from overweight to neutral. The region is still a crowded long, valuations are uninspiring, Euro is a headwind and ECB (European Central Bank) action is behind us”.
There was a minor downside reaction noted in the Euro after the news. Moreover, today in the Euro area, the Current Account report, which highlights a net flow of current transactions, including goods, services and others was published by European Central Bank.
The forecast was slated for a trade surplus of €26.3B in January 2016 (seasonally adjusted). However, the outcome was a bit on the lower side. The Euro Area current account registered a trade surplus of €25.4B in January 2016. The last reading was revised up to €28.6B.
Overall, the report was mixed, and was of hardly any help to the Euro buyers. It looks like the Euro bulls may find it hard to take the EURUSD and EURGBP pair higher in the near term. So, our idea of selling EURGBP pair may work very well if goes as per plan in the near term.
Good Luck with trading today!

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