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Forex: Ideas You Can Trade - EURGBP February Low of 81.56 Next Target

Posted by Steven Hatzakis on Apr 30, 2014 3:42:00 PM

EURGBP: Sixth Time Under 82.00 Since February Low, as Bearish Momentum Continues

The daily candle chart below shows the price history over the medium term of the Euro currency (EUR) versus the Great British pound (GBP). This pair is known as the EURGBP, as is trading near 82.17 around time of publication, after recovering off session lows of 81.94 earlier today.

The pair has breached under 82.00 for the sixth time since the Low of 81.56 was reached on February 17th 2014, and since the guiding trend remains to be the medium term bearish channel (red lines on chart)  - that level (reached in Mid February) appears to be the next target if 82.00 fails. 

In the last post about EURGBP, a lower-low was noted and followed with 81.96 hit on April 22, and then a brief bounce back to the median line of the channel which continues to provide both bearish support (when prices are above it) and bearish resistance (when prices are below it), and which caused prices to return towards current levels. 

If 82.00 fails to hold the gradual downward spiral, then 81.56 should be next, and with a very long term bullish trend line (point 7 in green on chart) intersecting near that level and coinciding near the lower support line of the bearish channel, and could therefore be sufficient for either a strong bullish reversal and bounce higher, or it that line failed too it could exacerbate the bearish continuation.

In the event that a bounce from 82.00 or from around current levels is sustained, it will likely be short-lived, with perhaps a correction to the upside above the middle line of the channel again before resuming back downwards.

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8241 with a Limit to take profit @ .8277  and a stop-loss @ .8220  Risk/Reward Summary: Limit risk = +36 pips profit / (-21 ) Stop-loss risk = Gain to Loss ratio =  1.71

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8189 with a Limit to take profit @ .8156 and a stop-loss @ .8219 Risk/Reward Summary:  Limit risk = +33 pips profit / (-30 ) Stop-loss risk = Gain to Loss Ratio = 1.10 

 

Medium Term Daily Candle Chart:

eurgbpdaily april 30 2014 note

 

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