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Forex: Ideas You Can Trade - EURGBP Target Reached as Trend Intact

Posted by Steven Hatzakis on May 12, 2014 6:55:00 PM

EURGBP: Prior Target of 81.56 Hit, Lower-Low May Follow with 81.00 Next

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 EURGBP. The current price of this pair is near 81.52 around time of publication, after reaching a new multi year low of 81.41 earlier today.

In the last post about this pair in the Ideas You Can Trade series, at the end of last month, a target of 81.56 was made, and was since shown to have now been achieved as the downtrend continues to push prices lower.

A very long term bullish trend line failed to provide any support which adds to the bearish prospects for EURGBP, which may now head towards 81.00 to look for support before moving higher.

If current prices, near 81.56, which had provided support during February, as discussed in the above mentioned previous article, then a floor could be building for the pair around current prices and could lift it back higher, even if temporarily.

However, if this line fails, and 81.00 becomes the next stop, then 80.45 could follow thereafter in coming weeks or even sooner. A very long term weekly candle chart is also provided below for comparison of the above mentioned long term bullish support line that failed to hold prices in the last few days - yet could still come back into play - if recovered. 

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

1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8201 with a Limit to take profit @ .8228  and a stop-loss @ .8181  Risk/Reward Summary: Limit risk = +27 pips profit / (-20) Stop-loss risk = Gain to Loss ratio =  1.35

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .8139 with a Limit to take profit @ .8101 and a stop-loss @ .8171 Risk/Reward Summary:  Limit risk = +38 pips profit / (-32) Stop-loss risk = Gain to Loss Ratio =  1.18

 

Medium Term Daily Candle Chart:

eurgbpdaily may 12 2014 note

Very Long Term Weekly Candle Chart:

eurgbpweekly may 13 2014 note

 

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