Weekend Analysis For W/C 12th Sept 2011 EUR GBP

Weekend Analysis For W/C 12th Sept 2011 EUR GBP

EUR GBP has ranged in a tightening triangle pattern for 3 years now. Despite this there have been some great trades along the way even if I do struggle to decide whether I’m bullish or bearish!

Lower highs and higher lows have been met with a consistent MACD downtrend which could suggest the bearish trades are slightly more attractive.

For some time I’ve had a line in the sand on the weekly chart set at approx. 0.8664 which may not technically be solid S/R but has offered the ability to take positions in either direction using it as a reference for stop loss positioning.

Last week we saw a break of that line so I’m now looking at options to consider short entries on it’s retest over the next week or 2. Worth keeping an eye on the upwards sloping trendline which is likely to make an attempt of offering support, and more likely if broken, would act as a short entry target if it’s retested from the underside, but for now 0.8664 is the area I’m watching on the weekly chart:

 

Moving onto the daily chart I have placed S/R’s in different and probably more prominent locations. If we do see an accelerated move to the downside, then the ultimate target would have to be the gap that price left behind back in September 2010 – A very attractive target particularly as it coincides with solid support.

This gap will almost certainly get filled at some point in the future, but predicting the move that will take us there is a little more difficult, but I fancy that now is an important time to be considering such possibilities.

Old chart, showing the gap:

4 Comments
  • RS2OOO
    Posted at 19:10h, 13 September

    I’ve still not committed to taking this trade yet, although I’ve just opened a small intraday short to test the water.

    Looking at shorter term charts, 0.8686 (50% fib) 0.8694 (resistance on 5 min chart) and 0.8723 (61.8% fib) all look like interesting levels to watch for possible reversals.

    These levels are all slightly above my original ideal short entry of approx. 0.8664 but if I do commit to a swing short entry I’ll certainly be looking for a weekly close below 0.8664 or I’ll scrap the trade.

  • RS2OOO
    Posted at 19:03h, 14 September

    I’ve now commited short at 0.8723 – as detailed in previous post.

    The current rally appears quite powerful, but this price level does allow for tight stops – stop loss currently 35 points away but may adjust this to allow room for overnight spikes.

  • EUR USD Analysis & Potential Short Trade « Index Swing Trading & Technical Analysis
    Posted at 19:45h, 15 September

    […] volatility in Euro pairs is pretty hairy at the moment. I was stopped out of the EUR:GBP short today on yet another spike of joy following news that the Euro has been […]

  • RS2OOO
    Posted at 19:57h, 15 September

    This trade was stopped out on the latest “Euro has been saved” news for a loss of 35 points. I’ll still consider re-entering this position and will update if and when I do.