Day trade
Trade view / 15 July 2016 at 8:45 GMT

Taking EURGBP higher within the corrective pattern

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

With the USD Index, we really are in ‘no man’s land’ at the moment. For the last 14 days, we have held within a relatively tight range of 98.68-95.37, and, as a result, most dollar-based pairs are in mixed and volatile corrective patterns. We still think that the bias is bullish, with this highlighting a potential flag in the USD Index. 

USD Index is in a tight range
USD Index
Source: Saxo Bank

We are looking at EURGBP today as we believe that the next corrective leg higher is underway. Numerous factors, including correlation, give an upward bias. 

Monthly – Broken out of the channel formation to the upside. Gains are being rejected above the 0.8500 area and there is scope for a corrective move back towards 0.8125 (breakout level) in a choppy manner. Only a monthly close inside the channel would make us rethink this bullish bias.  

EURGBP M
 Source: Saxo Bank

Weekly – Rotating around the trend of lower highs (from Q1 and Q3 2013) after extending the fifth wave (Elliott wave) at the 261.8% extension level of 0.8400 (from 06929-0.7491). We are now assessed as being the corrective AB=CD leg. 

EURGBP W
 Source: Saxo Bank

Four hour – We have broken out of the Ending-Wedge formation to the downside. The last move lower can be seen in five waves. This is a common occurrence in the first corrective wave lower, the AB leg of an AB=CD formation. Bullish Outside Bars on four-, two- and one-hour charts offer an upward bias. Likely resistance is at 0.8370-0.8400.

EURGBP 4
 Source: Saxo Bank

GBPUSD looks to have completed a bullish five-wave pattern higher (Elliott Wave). We are now short GBPUSD, looking for a drive lower in a corrective formation to possibly form a bullish reverse Head and Shoulders pattern close to 1.3140-1.3058 (buyers return). This offers a downward bias in GBP.

GBPUSD 4
 Source: Saxo Bank

EURUSD – Really messy trading while the USD consolidates. We don’t see any strong resistance now until 1.2230, so there is plenty of scope for a corrective move to the upside within the bullish channel.  

EURUSD 4
 Source: Saxo Bank

Management and risk description

The first leg on the BC phase is seen at 0.8370. We will then look to buy again on a pullback. This should be a three-wave pattern toward 0.8400.

Parameters

Entry: long at 0.8309.

Stop: 0.8275.

Target: 0.8369. 

Time horizon: today only.

— Edited by D. Deacon

Non-independent investment research disclaimer applies. Read more
15 July
Roma Ramler Roma Ramler
"strong resistance now until 1.2230," ? :-0
15 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
1.2230 ... what is this in ?
15 July
Roma Ramler Roma Ramler
quote from your text: , if you make a mistake? sorry)
15 July
goldfinger goldfinger
euro$ should be 112.30
15 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Ahh .... yes the EURUSD barrier ...... no EURUSD has a decimal at 1.11.......
15 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
1.2230 is the level I would look to short EURUSD .... probably not before
15 July
Roma Ramler Roma Ramler
thanks
15 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
signals are weakening in EURGBP ... stop at entry now.... could be an expanding wedge short term
15 July
vyacheslav111 vyacheslav111
your opinion on EURGBP now?
15 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
same ... but not in it
15 July
vyacheslav111 vyacheslav111
Thanks !
19 July
vyacheslav111 vyacheslav111
Hi, Ian! Your opinion on EUR/GBP on today?
19 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Looking for a higher correction towards 0.8460
19 July
vyacheslav111 vyacheslav111
Thanks, Ian !!!
19 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I am out ..... got a 13 count ... going to try and get in cheaper
19 July
vyacheslav111 vyacheslav111
at what price ?
19 July
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I am back in now ... same targets and stop ........ 8438 there is some resistance

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