Short EUR/GBP was the best trade this week, in percentage terms. The pair came into the week close to 0.8700 and finishes it close to 0.8450 — a roughly 250 pip drop.
The large red bar on the weekly chart follows four weeks of gains and signals the potential for a deeper retracement.
I think this is still a buy-the-dips trade but cautions is needed in the near term. A level to watch is 0.8330, which is the 61.8% retracement of the rise in 2013. If that breaks, we could see a drop down to 0.8200/0.8160.
