Euro is Forming a Critical Top against the Sterling

EUR/GBP (0.8590)

Points to consider with this euro Forex Market:

• Possible shooting star candlestick forming near 0.86. Hints at a pullback.
• Reversal now would indicate a longer term head and shoulders pattern now in play.
• Trade strategy: Stand aside

The EUR/GBP Forex market be forming a shooting star candlestick around the 0.86 level. This formation is visible on the below daily MT 4 chart, which we will use for today’s daily technical analysis. Should this shooting star be confirmed, then we would have a longer term bearish head and shoulders in play. This would be a key shift in our euro model in this Forex market. The head and shoulders would be carved out from the top from late June 2016.

Euro vs Sterling Technical Analysis

Let’s talk about today’s daily EUR/GBP technical analysis. There is near term technical support lining up at the rising trend line. This downside barrier is at 0.8502 today. A daily close below this technical support challenges a cluster zone that runs to the September 6 low. This downside barrier lines up at 0.8281 to 0.8335.

The alternative euro technical analysis, notes the first upside barrier that lines up at 0.8608. A break above this first level of technical resistance challenges a cluster zone that runs from the August 16 high. This upside barrier lines up at 0.8725 to 0.8776.

Trade Strategy

Let’s talk about today’s euro trading strategy against the Sterling Dollar. I had a short EUR sale at 0.8630. I managed to meet the first objective and book half the profits before this Forex market made a brief recovery. Right now, re-entering a short EUR sale, would be desirable as that would be in-line with my euro fundamentals forecast. However, I need to see a confirmation of the above mentioned shooting star candlestick. For now, I will remain on the sidelines and flat in this particular Forex market.