Two Forex Pairs with Plenty of Trading Opportunities

The EURGBP is at a major decision spot: will the monthly support hold or eventually break? Both directions offer a range of trading opportunities. The same can be said for the USDCAD currency pair. Let us examine them both.

EURGBP DECISION MOMENT

The flat support (green) but bearish angled resistance (red) indicates a chart pattern: the descending wedge. This particular wedge is most often a bearish pattern, but price does face hefty opposition: the support line of 0.7750 has not been broken ever since March of 2008 (blue circles). The support trend line has held for 7 years!

16- 12- 2014 eurgbp

Will 2015 finally be the year that sees the Euro crash against the British Pound?

Probably yes but it could easily turn out to be 2016 as well, because such a strong support could cause price to bounce at the trend line (and a bounce can take long to fully develop). The last 2 bullish monthly candles (orange) have already confirmed the difficulty for the EURGBP to push beyond 0.7750.

Clearly, price is at a bounce or break spot. In my opinion a bounce at the current support trend line seems most likely but both trades offer great potential.

16- 12- 2014 eurgbp 2

Here is a summary of the available trade potential:

  1. Bounce at support trend line: break of the orange trend line and rise (green arrow);
  2. Bounce at resistance trend line: respect for red trend line, turnaround (purple) and fall (red arrow);
  3. Break of support trend line: break of the green support trend line (red circles).

Eventually all 3 trade setups could take place. Keeping an eye on the daily chart and monitoring whether a bullish or bearish breakout occurs could give an early indication of what will happen on the monthly chart.

16- 12- 2014 eurgbp 3

USDCAD DECISION MOMENT

The USDCAD too is at a “talking spot”, which is another way of indicating a decision moment. Price is approaching the -27.2 Fibonacci target after bouncing at the 38.2 Fibonacci retracement level (green circle). There is also a horizontal level from the past (red circles) which provides extra confluence of resistance (red line).

16- 12- 2014 usdcad

This break or bounce spot could be very interesting to monitor:

  1. If the US Dollar strength and/or CAD weakness continues then there is a plenty of wide open space above the -27.2 target (blue circles);
  2. If price makes a consolidation first then uptrend continuation seems likely as well (purple lines indicating a bull flag followed by a breakout with 2 green arrows);
  3. If price makes a quick close and reverse at the target, then a strong bounce and reversal seems likely with an estimated target near the bottom (green circle).

16- 12- 2014 usdcad 2

The lines in the sand are clear – now it is up to us Forex traders to monitor them and be prepared to trade our trading plans when price shows signs of break or bounce.

Are there other charts that have decision moments? Write down a comment below and we will review your chosen pair in the upcoming week.

Thanks for sharing and Happy Hunting!

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