EUR/GBP FX (Spot Rate) – Short-term technical analysis
The forex pair EURGBP on the daily chart from March until May indicates a trading range confirmed by a sideways movement.
From the above daily chart we observe a formation of a bearish Failure swing completed downwards occurred between April 28 and May 22.
The first top (Point A) was formed on May 7 with a high price at £0.7481 followed by a bottom (Point B) on May 13 with a low price at £0.7121.
The second top (Point C) was formed on May 15 with a high price at £0.7281.
It is obvious that the market failed to make an equal or higher top from point A as a result of having a failure swing top.
Once Point C breaks the lower price of Point B (£0.7121) in a downward movement then we set up our expected targets (1st, 2nd and 3rd). In order to identify the targets, we measure the vertical distance from Point A to Point B. Later on, we use the same distance starting from the break point (B) and we measure from the last bottom to the next top.
Continuing with our analysis, we observe our first target to be at £0.6736, the second target at £0.6360 and our third target at £0.5992.
In case the price fails to reach the break point (£0.7121) then the failure swing top will not be valid.