Euro Analysis & EURGBP Trade

Hello Forex Traders!

EURUSD is at the talking spot: bounce or break time.

Will the EURUSD continue to higher grounds and surpass this year’s 2013 high at 1.3710 or will the resistance hold?

7- 10- 2013 eu 4

From a technical analysis point of view these facts are crystal clear:

1)      EURUSD is at the bottom of the uptrend channel (blue)

2)      EURUSD has divergence on 4 hour charts between tops

3)      EURUSD ha divergence on daily charts between tops

4)      EURUSD has placed a daily close above 88.6% Fibonacci retracement level

5)      EURUSD has broken above the -0.272 target, and the -0.618 target should usually be next

6)      Daily bearish engulfing twins

7- 10- 2013 eu d

To cut a long story short:

EURUSD is in an overextended short-term uptrend which has approached long-term resistance. The best trades are either:

a)      when the short-term trend turns bearish, or

b)      when the short-term uptrend regains its momentum. For the latter to happen, the daily oscillator needs to go back to the zero line OR the 4 hour chart needs to have higher highs and higher lows above the 1.3650-1.3710 resistance zone

Big tip: if you ever wondered how you can optimize your trail stop loss and keep your stop loss as small as possible, then check out this article. 

And for more information on the U.S. economy, click here. 


7- 10- 2013 eg m

More interestingly is the current spot of the EURGBP. Please review the following analysis to understand the enormous potential the EURGBP might have anytime soon:

1)      This currency pair has made a 5 wave structure on the daily chart

2)      In the meantime the currency could have completed a massive ABC structure

3)      On the weekly chart this could be the beginning of wave 5, with a wave 1-2 on the daily chart mentioned as point 1/2

4)      In that case wave 3 of wave 5 might be starting RIGHT NOW

7- 10- 2013 eg d

Price is already confirming the start of the wave 3:

a)      Price has had divergence to the downside, made a falling wedge, broke of the falling wedge

b)      Price has broken out of the down trend line (purple)

c)       Price is making 5 waves on a lower time frame (30 min chart)

7- 10- 2013 eurgbp 30 m

The VERY best trade setup is to wait for the following:

1)      Let these 5 waves on a lower time frame complete

2)      Wait for an ABC correction back towards the 50%, 61.8%, 78.6%, and 88.6% Fibonacci retracement (place a Fib on the entire up move on the 30/60 min chart)

3)      Any of these Fibs could be bouncing spot

4)      Put the stop loss underneath the bottom at 0.8310

5)      The -0.272 target is at 1.07 but aim for the top of wave 3 at 0.98, which is the conservative target for a weekly wave 5

6)      The potential reward is 1,500 pips, compared to either an 80 / 100 pip stop loss depending on when price retraces and which Fib a Forex trader uses for entry

7)      Once price completes the ABC for wave 2, then a wave 1 of wave 3 of wave 5 should unfold and the price should start moving up impulsively

What is your favorite currency pair setup this week? Let us know in the comment section down below!

Last but not least, check out Tim’s article on programming. 

Thanks for reading and sharing this article!

Good Trading

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