EURGBP: Pullback tests support level on .7000, next downside target .6940 if lower line of bearish channel is reached
The daily candle chart below shows the price history of the Euro currency (EUR) versus the Great British pound (GBP), this pair is known as EURGBP. Today the pair is trading near .7001 around time of publication - and lower for the 3rd straight trading day.
Last time EURGBP was reviewed in Ideas You Can Trade was last Thursday when a pullback was forecast and as bearish pressure on the EURUSD coupled with a recovery in the GBPUSD being the main catalysts for the anticipated dip.
Since then the EURGBP traded lower and hit .7000 today - a likely support area, and where a break below this line would aroudn the June 28th/29th low - would be very bearish.
Unless support holds near current prices, even after a brief bounce - the EURGBP may be heading for fresh multi-year lows and as seen below by the plethora of bearish trend lines that intersect around current prices (including the steeper bearish channel in purple).
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .7035 with a Limit to take profit @ .7069 and a stop-loss @ .7001 Risk/Reward Summary: Limit risk = +34 pips profit / (-34) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .6989 with a Limit to take profit @ .6940 and a stop-loss @ .7020 Risk/Reward Summary: Limit risk = +49 pips profit / (-31) Stop-loss risk = Gain to Loss Ratio = 1.58
Medium Term Daily Candle Chart: