Trade view /
09 August 2016 at 7:26 GMT
We have barrage of second-tier UK data at 0830 GMT followed by the NIESR UK GDP estimate at 1400 GMT. Although there is no clear indication of a change in trend for EURGBP as yet, there are warning signs of a potential turn and we look to sell a break of support today.
Here is what the charts are saying:
Weekly – Posted a bullish five wave formation (Elliott wave). That now dictates that we should see a choppy three wave correction lower. It should also be noted that for the last three weeks (and this week up to now) we are posting inside soldiers (bars). This is a clear indication that the move higher lacks strength. As long as 0.8577 is not breached we will see four inside weeks in succession.
Source: Saxo Bank. Create your own charts with SaxoTraderGO click here to learn more
Demark posts a 13 exhaustion count this week. This often indicates a change of trend
Daily – We are in a corrective channel formation. This is seen as the BC leg in the first corrective AB=CD leg lower.
Source: Saxo Bank
Our bespoke support is not seen until 0.8196. Using a measured move tool (AB=CD) would suggest that a top should be in place close to 0.8570. Channel top is seen at 0.8578. We also have a 78.6% pullback level at 0.8544.
Option one – Selling close to 0.8570 with a stop above the trend channel would offer good risk/reward targeting 0.8200.
Option two – Our preferred trade is confirmation of a change of trend. This would be selling as break of 0.8510. It should be noted that there is solid support at 0.8480 today so we could see a corrective bounce there.
Management and risk description
Entry: Selling a break of 0.8510
Time horizon: 2 weeks (estimate)
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more