I have been bearish on EURGBP for quite some time, as I think, the pair is going to test at least the 0.8220/00 level. The pair might complete three waves to around the same level as plotted on the weekly chart shown below. So, I think we should look for short term sell opportunities in EURGBP.
Looking at the 4 hour chart of EURGBP, there are several resistances on the way up like 0.8380, 0.8410 and 0.8435. If the pair makes a move higher, stops at any of these resistances and forms a combination of 4 hour divergence (bearish hidden) and 1 hour chart (bearish continuing), then we will jump into a sell trade as shown in the chart below.
Alternatively, there is an up-move trend on the 1 hour chart as shown below. If the pair moves down, breaks the trend line and the most relevant support (currently around 0.8360) and closes below, then we will enter a sell trade.
Initial target should be around the 0.8300 level and final could be around the 0.8250/20 level. Stop should be placed above the next major resistance in the first scenario and above the broken trend line and support in the second scenario.
Reviewing yesterday’s events and trades
Pending home sales data and Dallas Fed manufacturing index was released yesterday for the US. US pending home sales declined one more time in October and registered a reading of -0.6%, missing the expectations of 1.3%. Later, the Dallas Fed manufacturing index was released, which dived to 1.9 from 3.6, and missed the expectations of 5.0. The EURUSD and GBPUSD declined a bit yesterday, as EURUSD traded as low as 1.3490. However, both the pairs managed to recover some ground earlier in the Asian session. EURUSD traded as high as 1.3540 in the Asian session.
Fundamental Outlook for the day
Today, four important fundamental releases are scheduled for the US, including building permits data, housing starts data, Richmond manufacturing index and CB consumer confidence. If the data does not disappoint, then we can witness some recovery for the US dollar. Otherwise, the pairs such as EURUSD, GBPUSD, AUDUSD and NZDUSD may regain the momentum and trade higher. Later in the Asian session, New Zealand’s trade balance data will be released, which can cause some movements in the New Zealand dollar.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURCAD, NZDUSD and GOLD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
