Hi Traders! EURGBP forecast update and follow up is here. On May 3rd I shared this “EURGBP Technical Analysis and Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!

My Idea

On the H4 chart the price which was moving higher has created a bullish trend pattern in the form of three higher highs, higher lows, we may consider this as evidence of bullish pressure. Generally, after a bullish trend pattern, we may expect corrections and then potential continuation higher. Currently, it looks like a flat correction is happening in the form of a range and the price which is moving lower has reached a key support zone. This key support zone is formed by the 100%(0.83756) Fibonacci expansion level of the first wave, the 61.8%(0.83590) Fibonacci expansion level of the second wave and the bottom of the range. We also have a bullish hidden divergence that has formed between the first low that has formed at 0.82497 and the second low that has formed at 0.83824 based on the MACD indicator followed by a continuing bullish divergence, we may consider this as evidence of bullish pressure. Until the key support zone holds my view remains bullish here. A valid breakout above the top of the range would be the validation for this bullish view.

EURGBP H4(4 Hours) Chart Current Scenario

In this pair based on the above-mentioned analysis, my view was bullish and I was expecting the price to move higher further. Also, I mentioned that “A valid breakout above the top of the range would be the validation for this bullish view”. The validation for the bullish view which is a valid breakout above the top of the range happened here as per the plan. We then had a pullback but most importantly the price was holding above the key support zone. The price then moved higher further delivering 220+ pips move until it was blocked by a bearish divergence .

On the M15 chart, the market provided us with various facts supporting the bullish view. After the breakout above the top of the H4 range, we had a pullback on the M15 chart and the price which was moving lower created a bullish hidden divergence between the first low that has formed at 0.83720 and the second low that has formed at 0.83960 based on the MACD indicator. The price then moved higher and created higher highs based on the MACD indicator, we may consider these as facts provided by the market supporting the bullish view. Then as you can see in the image below how the price moved higher after that and provided an excellent move to the upside!
So traders, when it comes to trading, there are various important factors that we need to pay attention to, just because we have a good setup doesn’t mean that we can enter the trade randomly and it will pay us huge profits. First of all, we need to validate the entry and we should have a perfect entry plan to get into the trade which is a key factor when it comes to trading. This EURGBP forecast is yet another good example of this scenario.

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