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Main » 2016 » April » 4 » Trade Idea Forex EUR / GBP - play for a fall: when the trend is expected to phase weakening euro
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Trade Idea Forex EUR / GBP - play for a fall: when the trend is expected to phase weakening euro
 
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Trading opportunities for the currency pair: euro / pound is approaching month trendline. Zone 0,8065-0,81 for customers deliver strong resistance.From it we can expect the closing of long positions. AC indicator indicates a decrease in acceleration and possible reversal. According to the indicator CCI bearish divergence can be seen (to be confirmed). From 0.8090 / 0.81 pair is expected to decline to 0.78. If this level is broken, next target - 0.7672 (38.2% of the minimum expected level of 0.6981 to 0.8100).

 

 

prehistory

 


The latest idea for the pair EUR / GBP was published  September 7, 2015 At the time of its publication EUR / GBP was trading at 0.7344 at the upper boundary of the channel. After the correction rate was expected to rise to 0.7751. Buyers are tested in May the maximum 0.7482 and retreated to 0.6989. Correction turned out deeper than the planned level due to fears of market participants to mitigate the monetary policy of the ECB.


Strengthening of the euro against the British and the US dollar resumed on December 3 last year. Active close short positions on euro contributed to the ECB decision and the statements M.Dragi. Traders and investors had expected more aggressive measures to ease monetary policy, but were disappointed.


The ECB cut its deposit rate from -0.2% to -0.3%. The key rate has not changed and remained at 0.05% .On the press conference Mario Draghi said that the Central Bank has kept the volume of the asset repurchase program in the amount of EUR 60 billion per month, and extended it for six months, until March 2017.


After the ECB meeting and talk about leaving the UK from the EU, EUR / GBP has reached the calculated target in February 2016. Additional acceleration of the single currency received on February 3 from the head of the Federal Reserve Bank of New York William Dudley and 10 March by the ECB.


Speculators have begun to sell the US dollar when U.Dadli said that a strong dollar is a major concern for the Fed, US companies and the economy. The ECB, in turn, reduced the rate of three and expanded QE program to 20 billion euros. M.Dragi at a press conference said he did not need additional stimulus in the near future.Speculators his words interpreted as a signal for buying the euro as the European Central Bank will no longer ease monetary policy.

Figure 1. Monthly timeframe

Let's start with the analysis of the monthly timeframe. EUR / GBP exchange rate increased from 0.6935 to 0.8004. The single currency is going up to the British pound for the fifth month. Falling sterling weakened before Brekzitom so evrobyki may fizzle out around 0.81. Through this level passes trendline.


AC indicator is on maximum values, AO rolled to the zero line. The situation was similar at the level of 0.9082 in March 2013. Accordingly rebound and consider selling the euro from 0.8095. About the trend line should form reversal candlestick formation.

Fig.2 Day timeframe

The euro / pound slumped to the highs of 2014. 0,8065-0,81 Zone is for buyers strong resistance. Around this area can be expected closing of long positions. Already, the indicator AC is at the zero line. He points to a decrease in acceleration and possible reversal. According to the indicator CCI bearish divergence can be seen (to be confirmed). From 0.8090 / 0.81 pair is expected to decline to 0.78. If this level is broken, next target - 0.7672 (38.2% of the minimum expected level of 0.6981 to 0.8100).

 

 

A source

Analytics ALPARI

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