The EURGBP has rallied from its lows after briefly breaching its 100 DMA as visible in this H4 chart and formed a rising wedge formation. This pair has traded within the parameters of its formation. The most recent candlestick patter formed an inverted hammer at the top of its formation which indicates bearishness ahead.
MACD has formed a negative divergence and shows that momentum has faded as this pair moved higher. We expect this pair to breakdown into its 200 DMA. RSI has reached overbought territory and also formed a negative divergence.
We recommend taking a short position at 0.8103 with a potential second entry level at 0.8163. Should this pair breach that level to the upside we advise traders to place a long position in order to hedge the initial trade before adding new short positions to this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 0.8163. We do not use stop loss levels and will execute this trade as described above. Place your take profit level at 0.8053.
