Medium term
Trade view / 15 September 2016 at 7:38 GMT

EURGBP - A break of 0.8465 should see an impulsive move lower

Analyst / PIA First
United Kingdom
Instrument: EURGBP
Price target:
Market price:
Background

USD Index – We are not getting the bullish move that we originally expected and the outlook could be changing. There was a client of mine in my broker days who used to say ‘these aren’t door numbers sonny; they do move you know’. He was ‘old school’ from Chemical Bank (merged with Chase Manhattan). 

The reason that I mention this is that we have to aware of what is changing (forming). The lack of the aggressive upside move could result in the whole August and September trading being a consolidating triangle pattern for the US dollar. If this is the case, the bias is to break lower.
USD Index
 Source: Saxo Bank

US retail sales today so could see some fireworks. With the Bank of England also on the calendar, I am looking to EURGBP. Please note from the start of this report that a break of support is needed to confirm the bearish view.  

Monthly – The long-term bias remains bullish now that the cross has broken out of the channel formation to the upside. However, with a Doji candle posted in August close to the previous high of 0.8768, there is scope for a correction lower to possibly test the breakout level at 0.8075.
EURGBP M
Source: Saxo Bank 

Weekly – Bullish five Elliott Wave pattern completed at 0.8723 (2016 peak). A bearish Evening Star formation was posted on the weekly chart and we did see a continued move to the downside. However, the selloff stalled inside our ‘band’ of bespoke support (0.8354-0.8316) and we have seen a move back to the upside. As far as Elliott Wave is concerned this should now be the complex correction lower (AB=CD). 
EURGBP W
Source: Saxo Bank

Daily – The daily chart is a little more complex with a possible Head and Shoulders forming (bearish). There is ample scope for a move towards 0.8613 to form the right shoulder. We have posted a Doji style candle at the 50% pullback level of 0.8528 (from 0.8723-0.8332) so the BC leg could be completed. This is the reason why we say the next formation has to break. 
EURGBP D
Source: Saxo Bank 

Intraday (one hour) – We saw an impulsive move to the downside after bearish divergence was noted in this timeframe (chart makes a higher high while the oscillator (RSI) makes a lower high). Although we have seen a move to the upside overnight, 0.8527 is going to be a substantial barrier being the previous swing high and the 78.6% pullback level of the last move.
EURGBP 1
 Source: Saxo Bank

Traders could look to fade a move here with a stop above the high before the Bank of England today but it is a high risk trade. We have solid bespoke support at 0.8477 so would only look to sell the break.

 It should also be noted now that daily close below 0.8415 will form a bearish daily Evening Doji Star. 

Management and risk description

A move through 0.8365 and we look to move stop to entry.

Parameters

Entry: Selling a break of 0.8465

Stop: 0.8510

Target: 0.8160

Time horizon: medium term (end of September for target) - the trigger is for today only 

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
15 September
AlexF AlexF
hi Ian hope u are doing good what is your take on USD pair (JPY andCHF) prior to US data ?
15 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
not great today to be honest. Taking signals too late or too early !!! I think we see more USD selling
15 September
Dj TinTin Dj TinTin
this week has been one to forget
15 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
there is just no trend in the USD
15 September
AlexF AlexF
USDCHF knockind on that level again 0.9735
16 September
AlexF AlexF
Hi Ian, what about the move in USD now ? CPI related ?
16 September
AlexF AlexF
In USDJPY 102.11
16 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Yep..... still tough analysis... think EURUSD is up against the trend-line (neck) .... could see small USD selling (bounce) but I think the trend is in now (I hope)
16 September
AlexF AlexF
ar u going long USD ? which pair ?
16 September
AlexF AlexF
my saxo trader is shorting gold and silver, oil goes down...
16 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I need to see bounces now .... 1.3300 is a big figure for USDCAD to R/R rubbish .. favoured pair is EURUSD but support at 1.1165
16 September
AlexF AlexF
GL
16 September
AlexF AlexF
Let us know

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