A good short should fulfil two criteria:

  1. Price meets resistance.
  2. Price makes reversal pattern.

Based on these criteria, shorting EURGBP is not a good bet. A short on EURGBP qualifies for one not the other.

EURGBP daily chart August 2017 to 01 August 2018
EURGBP daily chart August 2017 to 01 August 2018

In this chart, we can make the following observations:

  1. Does EURGBP have any resistance? Yes. From July last month to October 2017, any of previous highs can pose resistance.
  2. Is EURGBP reversing? Price action shows a sequence of higher highs and higher lows which is an uptrend pattern. There is no evidence of any reversal.
  3. Additionally note the blue equidistant channel from  September last year which appears to be broken. If this is a genuine breakout, any low could be just a throwback/retracement that is building base for support.

 

This article ‘5 price features that set up a good reversal trade‘ defines a good short setup.

 

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