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Forex: Ideas You Can Trade- EURGBP Retreats Near Fresh Session Low

Posted by Steven Hatzakis on Nov 5, 2013 5:17:00 PM

EURGBP: Swift Bearish Price Action, Following Session Open

The daily candle chart below shows the price history of the Euro currency (EUR) versus the Great British pound (GBP) over the medium term and trading at .8395 (as of publication).This currency pair is known as EURGBP and is trading right near session current low of .8390 following a swift drop after today’s open. 

Late last month, EURGBP was covered in the Ideas You Can Trade series where the essence of the trend was discussed along with the potential return towards the median line of the overall bearish channel (point 6 in red on chart). Over the last week, the failure on the short term bullish channel (point 3 in green) as well as a equidistant line drawn parallel  to it – just below- reveals that EURGBP has failed to find support on either of these potential trend-lines. 

If support can be found near these level, which coincide near the lower line of a linear regression indicator (point 7 in white) a very short term bullish trend line could develop (such as point 1 in blue) with a return to test near the short term bullish channel (point 3) in the next few days.

If the bearish momentum of the past week continues, the pair may continue under line of the very short term bearish resistance (point 5 in yellow) and aided with general direction of medium term resistance (point 2 in magenta) pointing towards the lower support line of the medium term bearish channel (point 6). Nonetheless, a return to the median line of the channel, before a test of its lower support line appears more likely in the very short-term.

 Below are examples of how to trade a bearish continuation or a bullish reversal:

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8469 with a Limit to take profit @ .8580and a stop-loss @ .8409 Risk/Reward Summary: Limit risk = +111 pips profit / (-60) Stop-loss risk = Gain to Loss ratio =  1.85

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8373 with a Limit to take profit @ .8332 and a stop-loss @ .8401 Risk/Reward Summary:  Limit risk = +41 pips profit / (-28) Stop-loss risk = Gain to Loss Ratio =  1.46

Medium term daily candle chart:

eurgbpdaily nov 5 2013 note

 

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