Short term
/
Sell
Trade view / 06 June 2017 at 7:24 GMT

Rallies in EURGBP offer good risk/reward

Analyst / PIA First
United Kingdom
Instrument: EURGBP
Price target: 0.8613
Market price: 0.8711
Background

I took a GBP long trade through GBPUSD yesterday. Today looks interesting for the same bias through a EURGBP short. We may have to wait until the full formation is established.

Monthly – From December 2016 to April 2017 the cross produced spikes in both directions, highlighting indecision. May’s bullish candle cannot be ignored and holds a Marabuzo level at 0.8566. This area has been pivotal since 2009.
EURGBP M Source: Saxo Bank

Weekly – The cross appears to be in the AB=CD corrective formation lower, one of the hardest formations to forecast and trade. Last week’s candle produced a hammer formation that sometimes highlights the top of a trend. Not the strongest of signals. 
EURGBP W
Source: Saxo Bank

Daily – This seems to be holding in a possible bearish head-and-shoulders formation. A break of 0.8300 is needed to confirm. The worrying factor here for bears is that the AB=CD formation is not complete until 0.8860.
EURGBP D Source: Saxo Bank

Intraday (six-hour) – The most interesting timeframe for bears. It seems to have formed an ending wedge that is backed up with bearish divergence (the chart makes a higher high, while the oscillator makes a lower high).
EURGBP 6 Source: Saxo Bank

Intraday (60 minutes) – We should expect mixed and volatile trading in the run-up to Thursday's UK election. With this in mind, we could well stay within the 0.8755-0.8655 range. This timeframe highlights the wedge, but also a possible temporary rally to form a bearish head-and-shoulders pattern. I only want to sell rallies as trading a break (of support) would result in a too great a stop with such a high-risk event ahead. Prime short entry is 0.8750. Although high risk, this offers a good return with targets at 0.8613 and 0.8566.
EURGBP 1
Source: Saxo Bank

Management and risk description

Parameters

Entry: Selling EURGBP in the 0.8745-55 area

Stop: 0.8785

Target:  0.8613 and 0.8566

Time horizon: to trigger before Thursday. Targets should be in 3-4 sessions. 


— Edited by John Acher

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
2y
Morris Morris
Can't agree more. Is there any relation to the direction the GBP/USD is taking? I see you added the RSI bearish divergence on the 6 hour chart! Good consideration.
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Thanks Morris and good luck
2y
Fashionapolis Fashionapolis
@lan coleman, any idea when the UK Election result will be out? takes overnight to count so we know this friday?
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
from 8am onwards on Friday
2y
Fashionapolis Fashionapolis
thanks...
2y
usxau usxau
G'day Ian. Hope you had a great weekend. Terrible attack over the w/e hope all your loved ones are alright. Sorry for being sooo late, having visitors and will not be able to trade much! will not trade until after UK election as I am a pound bull against the low yielders! So waiting for confirmation of the ballots! LOL
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Hi Sabrina..... nice to hear form you. Enjoy the time with your friends... markets are always here !!
2y
Rofhiwa Thomoli Rofhiwa Thomoli
Guys. I think the best Short Positions are around EURCHF and EURJP or EURNZD.
2y
usxau usxau
Ian, just got filled eurgbp short! Thanks for the call! ;)
2y
Rofhiwa Thomoli Rofhiwa Thomoli
Here is EURJPY short.
2y
Andrew Perkins Andrew Perkins
Just taken a buy signal in GBPEUR
2y
Cat Cat
Good Morning Ian. Nice pop to the downside this morning.
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
yep ... more EURO weakness than GBP strength
2y
Morris Morris
A long GBP/USD and a short EUR/GBP followed by a short FTSE. While you have indicated a toppish EUR/USD earlier. This is very interesting!!! Ian are there interrelationships here? Which is leading and lagging?
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I think we stay away form the USD for now ... play the crosses and single currency strength ... it is high risk but high reward as noted before
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
that last pops great ... if we can get below yesterdays low then I think we would be safe placing stops at entry going into tomorrow
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
ECB cutting inflation outlook....... that helped
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
the exact level from the breakout point for the head and shoulders target is 0.8620
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
also watch 4pm UK close (4.5 hours from now) and 0.8604 (bespoke support)
2y
usxau usxau
G'day Ian. Nice call y'day and glad I jumped in on your idea! I have the next support @ 0.8650/60 - still way to go! ;)
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
morning Sabrina..... i feel a bit of 'greed is good' with this one :-)
2y
usxau usxau
Hey mate, I am with you. my euraud short is finally working deluxe and if we get there, I'd be happy! :)
2y
usxau usxau
audchf is breaking previous resistance too! ;) So glad we finally have some volatility back! Was high time! :)
2y
Fashionapolis Fashionapolis
wow. congrats on eur short. miss it
2y
Andrew Perkins Andrew Perkins
GBPEUR long thank you
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
EURUSD is now mixed in my system ... it is a buy weekly, sell 4 hours ... exhaustion counts on the bid and offer (highs and lows).. leaving well alone. I think the USD selloff is done for now
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
well done ..... 'get in' ...
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
probably a mild selloff in GBPUSD for the next hour .... then a bounce higher
2y
usxau usxau
Ian, totally agree with you, look at CHF and YEN .... we are 7 days away from FOMC and the USD shorts are going to take profit now IMO.
2y
Fashionapolis Fashionapolis
ya ian tat why manage to clear my gbpusd long early.

wait tmr after jpy GDP data out. shld be the final selling for uj to test the april low. once selling over after few hours i will long uj
2y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I think commodity currencies will stay the strongest out of the lot (apart from GBP :-)
2y
Fashionapolis Fashionapolis
plus i believe corney testimony at US session tmr will be USD positive. UJ has been dropping since May 11th when trump fires corney
2y
usxau usxau
AUD and NZD are the highest yielders of the G10 and therefore they should perform particularly well against the negative yielders like jpy and chf IMO!
2y
Fashionapolis Fashionapolis
i think aud n nzd usd may fall the most post fomc. because at 1.25% yield many corporates n investor will prefer to keep usd over aud n nzd. tat why now prob aud n nzd are boucing back n staying strong pre-fomc. Gold rally cant break 1300.
2y
usxau usxau
Audchf lets see if 0.7275 will hold on a retest. If so, I am happy to take a stab at it! :)
2y
Fashionapolis Fashionapolis
ya. i agree audjpy n nzdjpy / chf will be bullish.
2y
Fashionapolis Fashionapolis
most corporate business will keep more of USD fixed deposits instead of aud n nzd for the yields. unless they hv big market share in australia n new zealand market. The euro n gbp still can hold on its own due to its big market. My take is audusd n nzdusd will get crushed badly post fomc
2y
Fashionapolis Fashionapolis
also the job opening ytd at 6 million is at all time high. so i think fed will not be dovish.
2y
Fashionapolis Fashionapolis
also the US yields must be at an attractive % be4 the fed starts shrinking balance sheet n sell their treasuries bonds. otherwise noone will buy US treasuries bonds. tat why i think fed will hike in june n sept n raise to 1.5%. then shrink balance sheet
2y
usxau usxau
audchf got filled @0.7275, s/l 0.7265

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