As a follow up to yesterday’s commentary, EURGBP has now closed below the neckline at .7225 on a 4 hour basis. This confirms the double top between March and April.
From here we can watch for a retest of the level as new resistance. Potential support areas to the downside include .7154 and the 2015 low at .7012.
Of course traders who are more risk-averse can wait for a daily close below .7225 before considering an entry. This would provide further confirmation of the double top pattern and thus an increased likelihood that we will see further losses in the days ahead.
In terms of upcoming event risk, the docket is fairly light over the next 24 hours. However the one event traders should keep an eye on is tomorrow’s CPI reading for GBP, which is scheduled for 4:30am EST.
Remember to keep your risk to reward ratio favorable at 2R or better on this and every trade you take. In the case of EURGBP, it should be fairly easy to achieve this minimum R-multiple.