Technically, since the weekend gap to .7000 on Greek default uncertainty two weeks ago, EUR/GBP has recovered a couple hundred pips to an area that I can argue may be attractive to sellers.
As we can see in the four hour chart above of EUR/GBP, besides being a previous area of interest, the current trading area is also the Fibonacci retracement area and just under a fresh trendline of lower highs. Finally, the stochastic indicator shows potentially overbought conditions and possibly a reversal. We may already be seeing signs of a reversal as the market is trading lower since retesting the major psychological level of .7200.
With that in mind, and to play the broad Sterling strength vs. a weak euro (and the Greek default & more uncertainty), I’ve decided to take a very small short position with a wide stop of one weekly ATR, and an open target, but my initial adjustment area will be the previous swing low. Here’s what I am doing
