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An "Ideal" EUR/GBP Short Set-up

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Talking Points:

  • EUR/GBP Nears Rising Trend Line
  • A Much Larger Pattern in the Making
  • The ”Ideal” EUR/GBP Set-up

EURGBP is widely seen as a slow-moving currency pair, but nonetheless, it is creeping back to retest the underside of a rising trend line on the weekly chart, as shown below.

Guest Commentary: EUR/GBP Nears Weekly Trend Line

An_Ideal_EURGBP_Short_Set-up_body_GuestCommentary_KayeLee_October29A_1.png, An Ideal EUR/GBP Short Set-up

Admittedly, now may be a little early to form a longer-term short, as the primary momentum on the weekly chart has merely turned sideways, and not down. However, it should provide at least a near-to-mid-term short opportunity that could turn out to be a much larger trade.

The daily chart of EURGBP has a rising wedge forming rather beautifully below the trend line, which is another case for a short. The zone between the upper wedge resistance and the underside of the longer-term trend line has been estimated as 0.8550-0.8620.

Guest Commentary: Rising Wedge Pattern in EUR/GBP

An_Ideal_EURGBP_Short_Set-up_body_GuestCommentary_KayeLee_October29A_2.png, An Ideal EUR/GBP Short Set-up

Some traders would already be short on the pin bar from October 24, but given how close the rising wedge support is on the daily chart, a sharper entry would be preferable.

Going down to lower time frames is always useful for reducing risk and getting better entries, so we’ll turn to the four-hour chart for guidance.

Although there are several patterns in play on the four-hour time frame, not of least of which is the sideways/symmetrical triangle, there are no new factors here that would significantly change the analysis.

Guest Commentary: Be Very Picky with EUR/GBP Shorts

An_Ideal_EURGBP_Short_Set-up_body_GuestCommentary_KayeLee_October29A_3.png, An Ideal EUR/GBP Short Set-up

As a result, the ideal trade set-up would be another push into the projected resistance zone accompanied by reversal divergence. That should be quite easily fulfilled, as there has already been one divergence. This trade is one to be picky about entries, as the reward-for-risk would be poor otherwise.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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What’s inside:

  • EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
  • Resistance in vicinity of 11825/80 likely to keep a lid on further strength
  • Targeting the low to mid-11600s with more selling

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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

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Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

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