Hello Forex traders! Glad to see you again!
Wow what movement in today’s Asian session!!
I am sure some of you caught some great traders in the Asian session last night….
Unfortunately all of the breaks happened at around 2-4am at night which means I sleeping tight and sound… but maybe some traders from the Asia, Australia and the U.S. managed to catch those break out pips? Sure do hope so.
I think almost all of the currencies break corrections: EURUSD, GBPUSD, AUDUSD, NZDUSD, USDJPY, EURJPY, GBPJPY, AUDJPY, NZDJPY, GBPAUD, EURAUD, CADJPY, CHFJPY, EURCHF, EURNOK, NZDCHF, GBPCAD, AUDCAD, AUDCHF, CADCHF… lol 🙂 Of course nobody can trade them ALL! But there was enough choice… if only I were awake! 😉
Anyhow today I want to focus on the EURGBP first…
But before I do that, make sure to check out yesterday’s analysis on the EURUSD as well. Its gives a great long-term perspective of the EURUSD.
Also, I want to warn you of Nathan’s video on the EURUSD. Make sure to check that out as well. The title says “EURUSD long right now 400 pip target”. So that will be worth your time. That 400 target looks definitely doable to me so I am on the page with Nathan on this one. Make sure to check out both links… anyhow on to our EURGBP, the slow moving currency!
First of all, I wanted to share that the EUGBP has a very interesting setup / market “structure” on the 4 hour chart. When scanning the charts it immediately caught my eye and it was a chart that I had to share with you.
The setup / chart is quite fascinating in fact. What I like about is the fact that we can see many trend lines, zones and levels. Anyhow…
They say that 1 pictures is worth a thousand words, so I will save you my 1,000 word explanation and show you the chart on the 4 hour world instead 😉
On this 4 hour chart we are able to see that the currency has bounced several times off 2 support trend lines. These 2 support trend lines are the ones in black and show a potential upside trend, albeit one with a weak angle.
The interesting part is that the currency has just broken a downside trend line (red color) with an impulsive move to the upside.
AND it has made a decent sized downside correction which looks like a potential hook back to support for one more push up. In that regard it could be a great break pullback continuation trade. So basically the currency is back to heavy support so the likelihood of a bounce off the black trend lines and back up to the bigger trend line (dark red) is definitely a good statistical probability. Whether we can get a break of that dark red line will need to be investigated on a higher time frame.
By the way, a Forex trader never knows if their trade actually materializes as envisioned and as planned. But the trade plan is there to trade.
For the traders of trading room, they know that this is a boomerang setup…. Let’s see if this one indeed materializes for upside or whether we see a break down of the support lines…. Upside still at major support so lets if that bullishness can materialize.
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For the long-term perspective I would like to point to one particular article. This is still valid analysis so please take a look at that here.
But on the day chart, I did want to mention that the currency is showing some bullish signals:
1) Massive move up
2) Triple bottom at the 500 Fibonacci retracement (green box)
3) Bounce off the 500 Fib
4) Bounce off the broken tops (purple line)
The bigger question is this: which one of the 2 bigger trend lines will the currency break (black lines)? Will we see an upside break or downside break?
My “bet” and gut remains to the upside.
The massive move up is begging for the top to be broken, but I am well aware that a weekly trend line could push this currency pair lower so I will follow price where ever it goes….
But for now, looking at the price movements, fib bounces, AO, and classical trend analysis (higher highs and higher lows) the upside seems likely.
That in a way is a good extra confirmation for the 4 hour bounce off the support trend lines as well.
CATCHING THE DETAIL
When zooming into the 1 hour a clear downside corrective structure becomes visible.
The downside was corrective, choppy and slow, which is typical behavioral characteristics of a pullback / retracement.
Today we saw a break of that correction. It is easy to capture that downside correction by placing a trend line on the tops of a move. A break of that trend line constitutes the break, which happened earlier today. The currency moved its typical 50 pips or so…
And the EUGBP is now making a bigger hook back. Yes the move down is looking quite bearish… Then again the price is back at major 4 hour support levels so the bulls should step in any time soon. We will find out tomorrow.
But for the moment, any entry right in here at 0.8510 with a stop loss at 0.8483 and targets at 0.8460 and 0.8480 look good to me! What do you think? An interesting trade idea or are you going to skip it? Let us know in the comment section down below!
Anyhow keeps those “Fingers crossed” for me 😉
Thanks so much for reading! And for sharing the article!!
And don’t forget: please write down a comment here below what your idea is of the EG plan.
Good Trading all
Latest posts by admin (see all)
- How To Plan a Trade From Start to Finish - May 3, 2016
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