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September 25, 2011 10:57

EUR GBP Weekend Analysis for W/C 26th Sept 2011

Posted in: EUR
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Still keeping my eye on EUR:GBP with the emphasis of taking an eventual position on the short side. I’ve not quite lined up an ideal entry for this trade but there are a few points of interest worth noting in preparation for the trade.

Firstly, the Weekly chart shows that price has found support on the Weekly down trend line originating from the 2009 highs. Further arguments for the bullish side include the fact that price is above the Weekly bull/bear “line in the sand” I’ve annotated at 0.8664. Beyond this, we could also argue that there is a possibility that the current Weekly falling Wedge is a bullish formation that could break out to the upside – shown in the chart as the small red trend line.

However, we must always assume that a falling wedge is not a bullish formation until a breakout has proven itself and therefore my bias is ultimately for the bearish side as I type.

Last weeks Candle found itself sandwiched between the Weekly 20 and 50MA’s proving that there is still indecision as to the next direction of this pair. Realistically, a proper upside breakout is unlikely to take place before a test of the Weekly 200MA which adds comfort to the short bias for the time being.

 

The daily chart shows something a little more interesting in that we’ve got a good history of pattern repetition which argues for the current pattern to end with a sharp leg down, ideally to the lower horizontal support line where an unfilled gap still remains. MACD is also behaving in a similar way to the previous instance of this price formation:

For now, I’m watching this closely and will report further if and when I decide to commit to the position. We must also remain aware that the Euro Zone Crisis has created a lot of volatility in Euro Pairs and although the main trend’s have not reversed, price spikes are pretty random and can be painful if you are on the wrong side of them, so in the case of the present Euro situation stop loss placement is more important than the trade entry itself.

6 Comments on "EUR GBP Weekend Analysis for W/C 26th Sept 2011"
  1. Site Administrator
    September 26, 2011 at 23:16
    RS2OOO says:

    Entered this short today. Stop loss is currently set above the days high.

    Will decide tomorrow whether I’ll run this position as a full swing trade.

  2. .
    October 1, 2011 at 00:41

    […] EUR:GBP was entered short on Monday at 0.8715 as price spiked above the 5 minute 200 MA which followed a pattern of these occurences getting sold off. It did get sold off, but then rebounded and spent the whole week bouncing between a 30 point profit and a 30 point loss. I looked at it last night and  considered closing it as there were signs of positive MACD divergence on smaller time frames, but eventually decided that the original reasons for the trade were still valid and kept the position. That was fortunate as this morning it finally broke down from the week’s trading range and I hold this position into the weekend, currently showing a 126 point profit. […]

  3. Site Administrator
    October 3, 2011 at 22:59
    RS2OOO says:

    Closed half of this trade at 0.8538 for +177 pts.

    I still think it’s got more legs on the downside, but just wanted to bank something in case Euro suddenly gets saved again and it spikes.

    Stop on 2nd half is presently at b/e.

  4. Site Administrator
    October 6, 2011 at 13:31
    RS2OOO says:

    The big spike up took out my trailing stop loss on the 2nd half of this position today so that went for +30 points.

    EUR:GBP is trading a bit lower now, so might consider re-entry if it fails to rally from here.

  5. Site Administrator
    October 6, 2011 at 18:05
    RS2OOO says:

    I re-entered this trade this afternoon at 0.8720 which is better than the entry on my first swing short!

    I’m going to study the chart tonight just to make sure the original trade idea remains valid, and if so, this 2nd swing will be a “freebie”.

    I’ll update the comments if I change my mind and decide to close.

  6. Site Administrator
    October 10, 2011 at 18:31
    RS2OOO says:

    This 2nd swing short was taken out on a trailing stop loss today for +30 points.

    Yes, my stop was too tight for a swing trade, but I’ve already had one good result on this trade so as I was pushing my luck with this 2nd go following last Thursdays huge spike up, I wasn’t going to let it go back past breakeven, so, the stop was trailed for “personal” reasons as opposed to technical reasons.

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