Short term
/
Sell
Trade view / 19 April 2017 at 1:21 GMT

Downside is now 'in play' for EURGBP

Managing Director / Technical Research Limited
New Zealand
Instrument: EURGBP
Price target: 0.7886
Market price: 0.8355
Background

GBP traders got caught short when Prime Minister Teresa May announced a June 8 election, sparking a strong rally in GBPUSD.

The Conservative party has long had a big lead over the opposition in polls, so the prospect of the Tories remaining in power of itself would not account for the extent of the rally. There may be some short covering yet to be completed, but new information will be required to extend the move much further in the short term. EURUSD went along for the ride with sterling – in part – and a weaker US dollar also helped.

Today we will get a second estimate of Eurozone inflation for the year ended March, but little change to the earlier flash is expected. Any upward revision at all to the annual core rate of 0.7% would be a positive for the euro.
 
In the UK Friday’s retail sales number is the only major data release due out this week.

Management and risk description

EURGBP has now completed its complex nine-month Head & Shoulders reversal formation (which I have been highlighting over past weeks) to yield a downside objective of 0.7380.

Before this “lofty” objective is reached, other chart and mathematical targets along the way are:
  1. 0.7980, being a multi-week Symmetrical Triangle projection, and
  2. 0.7865, being a Fibonacci 61.8% retracement of the prior bull market advance from 0.6935 - 0.9365 (see weekly chart below).
Key chart resistance now lies at 0.8400/.08460 (refer daily chart below).

Parameters

Entry: Today: EURGBP is seen as a Sell at market and more so on any bounce
toward the late 0.8300s.

Stop: Above 0.8460, initially.

Target: 50% at 0.7995 and 50% at 0.7886.

Time horizon: Allow at least several days for targets to be met.

 Daily EURGBP chart (click to expand)
EURGBP  Daily Chart
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more. 

Weekly EURGBP chart (click to expand)
EURGBP weekly chart
Source: ThomsonReuters 

— Edited by Robert Ryan

If you would like an email notice each time Max posts a trade, then click here to follow him.

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
2y
FBT431 FBT431
Thanks!
2y
Treve Treve
Insightful Analysis, you've been "onto" this for quite awhile Max! Great work.
2y
Patto Patto
I think it's "Theresa" May - to be precise. She is calling the election to outflank the hard-Brexit members of her own caucus. She needs 50 or so new moderates to join them. Should be no problem: no one has had such a poll lead (20%) ahead of an election since Thatcher in 1983 and she scored a landslide..

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail