The euro may be ready to make some moves with the latest Euro area PMI’s set to release. Will this range setup on EUR/GBP draw in sellers if the data disappoints?
Resistance to Hold on EUR/GBP?
On the one hour chart above of EUR/GBP, we can see that the bulls quickly took the pair higher from a major support area (around 0.8550), bringing it back to a quick bearish reversal point from last week (0.8635).
And now, we can see a bearish technical argument forming as it retests this area of interest in the form of a bearish divergence between price action and the stochastic indicator.
Is this enough to solidify the short-term top and draw in selling pressure? Of course not, but when combined with potential catalysts, this could be a fast mover one way or another very soon.
And what we’re looking at this week for a catalysts is tomorrow’s European flash PMI data. Expectations are for a round of mixed sentiment updates, so we’ll definitely have to wait until the actual data release before getting a clearer picture.
If the data disappoints in general, that bearish technical signal could be enough to draw in a short-term bearish reaction on EUR/GBP. And with a daily ATR of roughly 50 pips, a move from current levels down back to the strong support area is not out of the question within a session or two.
Of course, if we get a big positive surprise from European business sentiment (highly unlikely given the German lockdown extension), then the technical setup will likely be negated.
What do you guys think? Is this the short-term top for 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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