EURGBP: Recovery Thwarted As Pair Hits New Multi-Year Low Today
The daily candle chart below shows the price history of the Euro currency (EUR) versus the Great British pound (GBP), known as EURGBP, and trading near .7902 around time of publication today.
Last time EURGBP was reviewed in the Ideas You Can Trade series, the bearish channel (point 6 in red on chart below) had been breached to the downside and the pair was looking very bearish, and has since traded lower.
Over the last two weeks EURGBP appeared to be gaining although that recovery was thwarted yesterday after resistance was found on the upper line of a short term narrowing bearish channel (point 3 on chart below).
While EURGBP still looks bearish and even more so after yesterday's price action, support may exist just below current levels near the lower line of the narrowing support channel.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .7983 with a Limit to take profit @ .8021 and a stop-loss @ .7961 Risk/Reward Summary: Limit risk = +38 pips profit / (-22) Stop-loss risk = Gain to Loss ratio = 1.72
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .7885 with a Limit to take profit @ .7860 and a stop-loss @ .7903 Risk/Reward Summary: Limit risk = +25 pips profit / (-18) Stop-loss risk = Gain to Loss Ratio = 1.38
Medium term daily candle chart: