EUR/GBP may find near term resistance

20. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: , , ,

Just a couple weeks back, you may recall reading that the EUR/GBP “snapped a major trend line” and since then the EUR/GBP continued higher by a couple hundred pips. However, today another trader (Rick P, Wizetrade trader) identified that the EUR/GBP is retesting a broken trend line from back in 2000. We also noticed it is testing previous horizontal support (July 2012 and Jan 2015) which is current resistance (today). See below:

1-20-16EURGBP1

If you look at the daily chart below, the current candle is developing a shooting star. I understand there is a lot of time today before the candle closes, but some sort of near term reversal candle may develop:

1-20-16EURGBP2

Although the EUR/GBP may head higher in the future because of “Brexit” fears, or perhaps expectations of a BOE rate hike continue to push out towards 2017. In the very near term, we could see a pullback towards the .7500 pence level again.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am looking to establish a EUR/GBP short in the next 24 hours

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EUR/GBP snaps multi-year trend line

08. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

The EUR/GBP has been in a steep downtrend for the last couple years since 2013, and yesterday we took notice. This week we not only snapped that downtrend, but we also are breaking out from key resistance above the .7500 pence level:

1-8-16EURGBP2

Although it is still early in the day and we could close back above the .7500 level, what you will notice is that longer term we held a minor Fibonacci level, and also made higher lows:

1-8-16EURGBP2

A natural target for the reversal pattern is a potential “double bottom” on the daily chart, which suggests we could rally as far as .8000 in the coming months ahead:

1-8-16EURGBP3

Although I think a “Brexit” is highly unlikely this year, the risks and uncertainty surrounding the U.K. early this year may be enough to fuel a move higher in the EUR/GBP like this. If anything, a move like this in the EUR/GBP, with as much liquidity that trades through this pair daily, should keep you defensive while attempting to play the GBP on the long side (even on crosses).

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am not in a EUR/GBP long (yet) but will be buying on dips in the coming days.

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