EUR/GBP - What’s next after Dragon Fly Doji

EUR/GBP recovered sharply from the low of 0.8369 on Thursday to end the day largely unchanged at 0.8465 levels, thus forming a ‘Dragon Fly’ Doji formation on the daily chart.

Dragon Fly Doji is a reversal pattern, although it does require a follow through, which in this case would be a bullish move today.

The data docket is empty across the Eurozone, hence the cross is likely to take cues from the action in the European stocks and Italian bond yields.

The Italian bond yield could particularly influence he EUR pairs, given the referendum is due this Sunday.

EUR/GBP Technical Levels

The cross was last seen trading around 0.8465. A break above 0.85 (zero figure) would open doors for a rally to 0.8578 (Nov 30 high). A daily close above the same would add credence to Thursday’s Dragon fly Doji and suggest trend reversal. The gains then could be extended to 0.8707 (Nov 15 high).

On the lower side, breach of support at 0.8455 (Nov 30 low) would expose 0.84 (zero figure), under which the losses could be extended to 0.8369 (previous day’s low).