Thursday, February 26, 2015

GBP still stronger than EUR



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GBP still stronger than EUR

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GBP still stronger than EUR



A month ago I suggested that the traders should be looking for short signals in EURGBP. At the time I wrote: As the weekly trend is still down and we have a considerable resistance above, the focus for longer term trades should be in the short side. Those inclined to go with this option should look for momentum reversal signals after price has rallied to higher levels. Both levels (approx. 0.7596 and 0.7756) are worth monitoring for signals.


Price moved higher and reversed just below 0.7596 giving an excellent short entry for our traders. EURGBP has since moved lower some 280 pips. The market’s clearly in a downtrend still and the Stochastics being oversold is therefore natural. The nearest weekly support and resistance levels are at 0.7255 (a weekly pivot high from May 2003) and the 0.7406 a recent weekly low.


EURGBP, 4h


EURGBP, 240 min


The pair has been moving slowly lower since the short signal near to the 0.7596 resistance level and is now at the lower Bollinger Bands. The mid line in the regression channel (regression line) has been limiting the moves higher recently. Stochastics is moving higher from oversold levels today indicating loss of downside momentum. The nearest daily pivot low resistance is at 0.7348 and it coincides with the 4h Bollinger Bands. The other potential resistance levels are at 23.6 Fibonacci retracement close to channel top at 0.7374 and a resistance zone at 0.7406 to 0.7416 (a weekly pivot low from January and the 38.2 Fib level).


EURGBP, 1h


EURGBP, 60 min


The price has been retracing to the upper Bollinger Bands and rejected each time at lower levels. This has created a downward channel. Intraday traders wanting to take advantage of this channel might consider short trades at the upper end of the short term bear channel. I have drawn two trendlines, one based on the Line On Close chart (the red trendline) and the other at the proximity of the hourly candle tops. This gives us a potential sell area for quick short term trades while those looking to enter into swing trades might consider higher entry levels to maximize the probabilities.


Conclusion:


The price is still trending lower which obviously means that we should be looking for shorting opportunities. Short term intraday traders might want to use the 60 min time frame channel with momentum reversal signals in minor time frames such as 5 min. Traders looking to gain an entry to a trade with a longer horizon should monitor price action at levels closer to the upper end of the 240 min trend channel and resistance levels. Should the price action confirm the validity of the level considered then a short entry would be justified. The 0.7255 is a historical weekly pivot high and a former resistance level. Therefore it is now a likely support level and therefore a natural target level for short term trades.


 


Join me on Live Analysis Webinar on Tuesday 3rd of March at 12:30 pm GMT. Register HERE and as usual it is better to log in early to get your seat!


 


Janne Muta
Chief Market Analyst
HotForex


Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.





GBP still stronger than EUR

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