EUR/GBP rally post ECB capped below cloud, downside risk remains

EUR/GBP cross topped out around 0.7250 Thursday after big squeeze on EUR shorts after ECB disappoints markets with bare-minimum easing package.

• Rally in the cross post ECB was capped below the daily cloud which is encouraging enough for a resumption of the downtrend
   
• On the day, the pair has failed once again at higher levels and dropped below 0.72 handle, is currently trading at 0.7188
   
• Support on the downside is thin until the 10/21 DMAs at 0.7075/0.7064, break below could open up lower levels again. Immediate resistance is seen at 0.7236 (50% Fibo of Oct 13 to Nov 17 fall)
   
• Markets see scope for further ECB easing in March and BoE rate hike likely in 2016. Contrasting ECB/BoE monetary policy outlooks may keep cross sub-0.7250 (Oct 28 high)

Resistance Levels:
R1: 0.7236 (50 % Fibo of Oct 13 to Nov 17 fall)

R2: 0.7262 (Cloud base)

R3: 0.7284 (Daily Cloud Top)

Support Levels:

S1: 0.7176 (38.2 % Fibo of Oct 13 to Nov 17 fall)

S2: 0.7077 (10 DMA)

S3: 0.7066 (21 DMA)