Day trade
Trade view / 05 September 2016 at 7:28 GMT

EURGBP selloff set to reverse

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

USD Index – The Nonfarm payroll release did little in the way in giving a clearer picture for the immediate outlook for the USD Index. Although the long-term bias remains mildly bullish, we expect intraday trading to remain mixed and volatile. 

Looking at the intraday chart (four-hours), we have a completed a bullish five-wave count. This should dictate that the market would now look to buy dips. However, we could see a correction to levels below Friday's dip (95.18) before the correction lower is complete. With this in mind, fading USD longs is the trading technique we would use today. 

USD Index
Source: Saxo Bank

EURGBP is looking overdue for a profit-taking correction higher and I am now looking to fade dips down to 0.8356. I do not want to see a daily close below this support. European PMI data (The Purchasing Managers Index) is on tap today, so we could see some intraday spikes. 

Monthly – The longer timeframe keeps the cross positive after breaking through the corrective channel formation to the upside. However, after posting a Doji Top in August there is ample scope for a correction lower to retest the breakout level at 0.8075.

EURGBP M
Source: Saxo Bank

Weekly – After completing a bullish five-wave pattern (Elliott-Wave theory), we posted an Evening Star formation from the high. This would suggest that a medium-term top is in place. However, we have bespoke support at 0.8356 and 0.8320 so it is unwise to sell from current levels.

EURGBP w
Source: Saxo Bank 

Daily – Dip buying from current level (or close by) would likely form a Head-and-Shoulders pattern this week. The prime target area for a corrective right shoulder is 0.8613-0.8724. 

EURGBP D
Source: Saxo Bank 

Intraday (four hours) – The four-hour chart highlights the first leg of the corrective selloff complete close to the 261.8% extension level of 0.8373 (from 0.8724-0.8590). As long as we see a daily close above 0.8356, the immediate bias remains bullish. 

EURGBP 4
Source: Saxo Bank 

Management and risk description

Parameters

Entry: long at 0.8396.

Stop: daily close below 0.8356.

Target: 0.8600.

Time horizon: this week.

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
05 September
Vakas Vakas
Hello Ian... after services pmi your view about the trade is still the same? wouldn't .8330/40 would be a better price to buy with a stop below .8300?
05 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I have support at 56 and 20 so you may be correct
05 September
Dj TinTin Dj TinTin
I'm in ,
05 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Good luck
05 September
Rofhiwa Thomoli Rofhiwa Thomoli
let me give it a try
05 September
Anton Bushin Anton Bushin
Ian, what do you think about USDJPY? will it go dowon after Friday statistics?
05 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Think it will have an intraday bounce higher but i think we could see lower levels this week
05 September
Dj TinTin Dj TinTin
What a flat days trading roll on the US back tomorrow
05 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
lets hope the market doesn't wait for Thursday .... RBA overnight and European GDP could be fun
05 September
Dj TinTin Dj TinTin
I've got 2 trades on AUDUSD hoping for some down side treading before exploration end of the week
07 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
0.8414 first barrier in EURGBP where I look to take of half
07 September
Dj TinTin Dj TinTin
lost on the AUDUSD just entered this trade for some downside action
08 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
could form a Head and Shoulders this morning TinTin ... good luck

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