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The Euro may be readying for another push lower against the British Pound prices produced a bearish Dark Cloud Cover candlestick pattern below resistance in a falling trend line cluster (now in the 0.8268-0.8330 area). Near-term support is at 0.8167, the January 22 low. Alternatively, a reversal through the trend line cluster exposes the 38.2% Fibonacci retracement at 0.8390.
While risk/reward parameters have improved in line with what we discussed last week, we will opt against taking a short position. The emergence of positive RSI divergence warns of ebbing bearish momentum and hints a larger upside reversal may be brewing. With that in mind, we will continue to stand aside until greater directional clarity emerges.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com