Buying dips offers good risk/reward in EURGBP

Today we have an interesting opportunity for EURGBP. The pair is trying to fight back and trade higher after testing an important support on the daily timeframe. There is a bullish divergence on the daily chart as well, which adds value to the bullish bias. So, I think buying dips offers good risk/reward in EURGBP in the short term.

Looking at the hourly chart of EURGBP, there is a channel forming, which is very critical for an up-move in the short term. There is a bullish divergence on the hourly timeframe as well. If the pair holds the highlighted bullish trend line and support at around 0.8205/10 levels, then we can consider entering into a buy trade. We can initiate a buy trade on dips or at current levels. However, we need to be very careful as there are several key risk events lined up in the London session.

Initial target should be around 0.8250, and final target could be around the gap close level. Stop should be placed below the 0.8205 level.

US Existing Home Sales Data
Yesterday, during the New York session the US existing home sales data were published, which failed to impress the market investors. The outcome was a bit better than expected, but stayed below the historical standards. The Richmond fed manufacturing index was also released, which came far better than expected, and registered a strong rise to 7. This resulted in a rise of the US dollar against few major currencies. Furthermore, Australia’s CPI data was published in Asian session, which missed the expectation, and as a result the AUDUSD pair dipped sharply.

Fundamental Outlook for the day
Today, during the NY session the Canadian retail sales data will be published along with the US New home sales data. Both the economic releases could have a major impact on the respective currencies. Let’s see how the market folds after the events. Moreover, during the next Asian session the RBNZ will announce the interest rates, which can act as a catalyst for the New Zealand dollar in the short term. Let’s see what the RBNZ has in store for the traders in the upcoming meeting.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, USDJPY, USDCAD, NZDUSD, AUDNZD, EURAUD, EURCAD and OIL.
Get it HERE: Vladimir’s Markets Forecast

Trade carefully friends. Happy trading!