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Forex: Ideas You Can Trade - EURGBP Bearish price action

Posted by Steven Hatzakis on Jun 26, 2013 9:53:00 AM

EURGBP: Bearish breakout possible  

The chart shows EURGBP descending a short term bearish resistance trend line (point 1 on chart) and testing the support line of a ascending short term bullish channel (point 3 ) which coincides with medium term horizontal support at .8468 (point 5). There is a convergence taking place between short term resistance (point 2) and bullish support lines (3 and 4) and a developing symmetrical triangle formation which is testing a breakout to the downside.

Although prices have been narrowing into this developing triangle the recent false breakout above short term resistance (point 2) reversed the bullish move into a bearish path (point 1) and if current support levels fail (points 3 and 5) then a bearish continuation may ensue along the current trend line (point 1) which could propel EURGBP  toward .8350 and further support (near point 6).  

Within the current short term bearish trend, a bounce on the short term bullish line (point 3) could provide enough support to bring EURGBP back up along a potential bullish trend line (plotted with the angle of previous bounces on this line) and back into the triangle formation.

Below are examples of how to trade a bearish continuation if the trend continues and current support levels fail or a bullish reversal if the trend reverses along current support lines. 

1.  BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8490 with a Limit to take profit @  .8540 and a stop-loss to cut losses @ .8467 Risk/Reward Summary: Limit risk = +50 pips profit / (-23) Stop-loss risk = Gain to Loss ratio =  2.17

2.  BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8446 with a Limit to take profit @ .8335 and a stop-loss to cut losses @ .8487 Risk/Reward Summary:   Limit risk = +111 pips profit / (-41) Stop-loss risk = Gain to Loss Ratio =  2.71

 

eurgbpdaily june 26 2013 note
 

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