Shorting EUR/GBP at the 50 SMA
EUR/GBP made quite a reversal in August and has lost more than 5 cents since then. This pair used to be quite bullish in summer as Theresa may’s Brexit deal fell apart and she had to leave her position as Prime Minister of UK. The new PM Boris Johnson (BoJo) came in will all guns blazing, promising to leave the EU on October 31 deal or no deal.
But, the opposition and some Tory rebels have opposed such a scenario and they voted to make it illegal. This has improved the sentiment surrounding the GBP, which has turned bullish in recent weeks. As a result, EUR/GBP has turned bearish.
The downtrend has been pretty straightforward during these last two months and moving averages have done a great job providing resistance during pullbacks and pushing the price lower. Today we are seeing another pullback higher as BoJo insists that he will push for Brexit on October 31 no matter what. Now the price is back up at the 50 SMA (yellow) on the H4 chart, so we decided to take a shot here, shorting this pair against this moving average, since the retrace higher is almost over.
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