EURGBP: Middle of Long Term Bearish Channel Reached, Down Trend May Resume
The daily candle chart below shows the price history over the medium term of the Euro currency (EUR) versus the Great British pound (GBP), known as the EURGBP pair, and currently trading at .8324 (as of publication).
The target near the middle of the bearish channel (point 6 in chart in red), that was noted in the last post about this pair in the Ideas You Can Trade series, was reached today, as the trend previously noted appears intact.
Current prices are literally right on the median line (middle line) of the channel, after coming off highs under .8350, which coincided near a resistance line (indigo color on chart) that is similar yet a different angle to the medium term bearish resistance (point 2 in magenta).
If this newly drawn resistance line (which in the last post was a dotted line) can be overcome, the pair could push higher, although a return to the median line (where the pair is trading near right now) should follow.
A less bullish outcome, and more likely appears that EURGBP will resume its downtrend and return towards the lower support line of the channel (point 6) although a somewhat sideways market could follow down the middle line (of point 6), which could act as bearish resistance, before a move either way is made. Overall the downtrend seems overbearing on any short term bullishnesses, unless something changes.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8352 with a Limit to take profit @ .8371 and a stop-loss @ .8239 Risk/Reward Summary: Limit risk = +19 pips profit / (-13) Stop-loss risk = Gain to Loss ratio = 1.46
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8258 with a Limit to take profit @ .8207 and a stop-loss @ .8297 Risk/Reward Summary: Limit risk = +51 pips profit / (-39) Stop-loss risk = Gain to Loss Ratio = 1.30
Medium term daily candle chart: