A good short should fulfil two criteria:
- Price meets resistance.
- 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.
In this chart, we can make the following observations:
- Does EURGBP have any resistance? Yes. From July last month to October 2017, any of previous highs can pose resistance.
- 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.
- 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.