EURGBP: Target near .7960 Reached as Support Desperately Needed To avert Drop
The daily candle chart below shows the price history of the Euro currency (EUR) versus the Great British pound (GBP). This currency pair is known as EURGBP, and is trading near .7991 around time of publication today.
After trading lower for six consecutive trading sessions, EURGBP is finally trading higher than its opening price today, after rebounding from the current session low of .7957.
Last time EURGBP was covered, last week, in the Ideas You Can Trade series, the exit of the medium term bearish channel was setting up a bearish continuation and the support level - confirmed by today's bounce - was noted at .7960.
Since this level has shown to provide enough support to reverse the downtrend, albeit only slightly, if further buying occurs nears this price a floor could be established. However the prospects for EURGBP still look bearish, although the re-emergence of support near .7960 should also be taken with caution and therefore something traders may be watching.
A break below today's low would signal further bearish momentum, whereas a recovery above .8063 would be needed to regain the bearish channel that was exited last week for the first time in over a year.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .8010 with a Limit to take profit @ .8041 and a stop-loss @ .7979 Risk/Reward Summary: Limit risk = +31 pips profit / (-31) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .7951 with a Limit to take profit @ .7911 and a stop-loss @ .7989 Risk/Reward Summary: Limit risk = +40 pips profit / (-38) Stop-loss risk = Gain to Loss Ratio = 1.05
Medium term daily candle chart: