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The Euro looks poised to extend its advance against the British Pound after prices pushed through a cluster of falling trend lines initiated from August 2013. Near-term resistance is at 0.8348, the January 13 high, with a push above that targeting the 38.2% Fibonacci retracement at 0.8390. Trend line resistance-turned-support begins at 0.8310.
We opted not to attempt a short position having noticed positive RSI divergence, a decision validated by today’s breakout. The pair is now too close to relevant resistance to justify a long position on from a risk/reward perspective. A short trade is no less unattractive without a viable downward reversal signal however. We remain flat for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com