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EUR/GBP hits the top of the watchlist as the pair bounces higher in a solid downtrend. Will it meet resistance and return to the downtrend?

EUR/GBP Fibonacci Resistance?

EUR/GBP 4-Hour Forex Chart
EUR/GBP 4-Hour Forex Chart

With a relatively light economic calendar this week, we’re looking at technicals as a potential catalyst for short-term trading opportunities. And today, EUR/GBP is looking might fine in that regard as the bears seem to be taking a breather from the recent swift move lower.

Broadly, Sterling is taking a hit on the session without an apparent direct catalyst, and the euro seems to be bouncing on broad risk-off sentiment and possibly on positive Sentix Investor confidence data. These aren’t really game changing factors to the longer-term trend at the moment, so the odds are that bears may look at this bounce as another short opportunity in EUR/GBP.

We’ll be in that camp short-term, and we’ll be watching out for a bearish reversal pattern to form somewhere between current levels up to the top of the Fibonnacci retracement area / falling ‘highs’ pattern. If we see that pattern and the themes of the U.K. reopening vs. Euro area lockdowns still in play, we’ll consider a short position for both swing and long-term potential.

What do you guys think? Is this bounce an opportunity to play the longer-term trend lower? Or do you see other factors that can weigh more than covid headlines on EUR/GBP? 

Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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