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The pound’s jump across the board got me looking at EUR/GBP’s short-term downtrend. What do you think of this setup?

Currency Snapshot:

Major Forex Pairs Performance from MarketMilk
Major Forex Pairs Performance from MarketMilk

Fresh Market Headlines & Economic Data:

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What to Watch: EUR/GBP

EUR/GBP 1-hour Forex Chart
EUR/GBP 1-hour Forex Chart

U.K.’s exit polls printed earlier pointed to a huge win for Boris and his gang. The decisive win turned out well for the pound, which shot higher against its major counterparts.

In EUR/GBP’s case, news of Boris’ strong win translated to a 170-pip move in just a few hours. What’s more, the trend will likely be extended given that there are no other major catalysts scheduled in the European session.

I’m looking to enter EUR/GBP’s downtrend around the 50% Fib retracement on the 1-hour chart. As you can see, the level is also near a previous area of interest and the 100 SMA.

A stop above the falling trend line could work well especially if EUR/GBP ends up making new lows. I’m betting on good ‘ol profit-taking near the end of the week to take the pair back to more attractive selling prices.

If you’re not sure about the size of your potential stop losses, then you should know that EUR/GBP has moved by a bit more than 60 pips in one direction on Fridays in the last 30 days.