EUR/GBP has reversed sharply after both respecting the 50-day SMA which is currently trading around the .7330 area and forming a bearish Gartley pattern.
It appears that the longer-term bearish trend is finally resuming after the mid-March rebound. The March 11th low of .7013 saw price rally steadily until last Thursday’s high of .7384. Earlier in London, EUR/GBP climbed higher to point D of the noted pattern after a report showed UK Construction PMI contracted to 57.8 in March, down from the 60.1 in February. The silver lining was that business confidence surged to the highest level for just over nine years.
If we continue to see the downward pressure keep price below the .7300 handle by the end of the U.S. session, we may see price target the .7220 region over the next couple trading days.
If we do not see further bearishness from the Gartley pattern, the next leg up may target the .7400 handle. If we continue to see a squeeze higher, offers may start to grow at around the .7500 zone. My end of year target for EUR/GBP is .6800.
The trade: Sell EUR/GBP at .7320, with a stop loss at .7370 and a take profit at .7220. The Risk/Reward Ratio is 1: 2
Edward J. Moya
WorldWideMarkets Online Trading