EURGBP: Testing Near November Highs, Down-Trend Theme Still Appears Intact
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 .8441(as of publication).This currency pair is known as EURGBP and is trading just off previous sessions highs of .8453 (for December 16, 2013) which is in close range from last months high. The daily candle represented in the last bar for today (December 16) just completed as midnight struck GMT time and December 17, has already begun in the UK's major timezone.
The very short term bullish line (point 1 in blue on chart) has kept its course since the last time the pair was covered in the Idea You Can Trade series, when the target of .8500 was noted and is still within close proximity although might be out of reach if the bullish momentum of recent weeks looses its power.
The .8500-.8461 range appears to have been a level of horizontal resistance, including the high of the last candle which just closed as mentioned above and that could reverse the short term momentum. If this level can be overcome, then .8500 could follow with .8600 a next step thereafter and coinciding near the long term bearish resistance line.
If the very short term bullish support line (point 1) fails to hold, a bearish continuation down a very short term bearish resistance line (such as point 5 in yellow) may follow with a target on the line similar in slope to the medium term bullish support line (point 4 in aqua) just above .8300 in the short term, similar to the previous post mentioned.
Before this happens a smaller pullback could follow to test the median line of the bearish channel (point 6) as the overall theme of the downtrend over the medium term still looks intact and therefore the median line should be tested again as priced return lower.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8469 with a Limit to take profit @ .8498 and a stop-loss @ .8443 Risk/Reward Summary: Limit risk = +29 pips profit / (-26) Stop-loss risk = Gain to Loss ratio = 1.11
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8412 with a Limit to take profit @ .8389 and a stop-loss @ .8329 Risk/Reward Summary: Limit risk = +23 pips profit / (-17) Stop-loss risk = Gain to Loss Ratio = 1.35
Medium term daily candle chart (with the latest Candle that just started for December 17, 2013)
Medium term daily candle chart (with the latest Candle for December 16, 2013 uncomplete)