Hi Traders! EURGBP short term forecast update and follow up is here. On May 3rd 2023 I shared this “EURGBP Technical Analysis And Short Term 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 Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, and lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then a further continuation lower. Currently, it looks like a correction is happening. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads a value over 25 which we may consider as yet another evidence of bearish pressure. Also, we had two strong support zones that have formed and the price which was moving lower has broken below these zones and is holding below them, we may consider this as yet another evidence of bearish pressure. Currently, these strong support zones are acting as strong resistance zones for us. Until these two strong resistance zones (marked in red) shown in the image below hold, my short-term view remains bearish here and I expect the price to move lower further.
EURGBP H1(1 Hour) Chart Current Senario
In this pair my short-term view was bearish and I was expecting the price to move lower further until the two strong resistance zones hold. The price action followed my analysis exactly as I expected it to here. After the bearish trend pattern, the price which was moving higher reached the first strong resistance zone, respected it and then it bounced lower from this zone. In addition to this, we could see that the price has created a bearish hidden divergence between the first high formed at 0.88388 and the second high formed at 0.87938, followed by a continuing bearish divergence between the first high that formed at 0.87938 and the second high that has formed at 0.88287 based on the MACD indicator, which we may consider as evidence of bearish pressure. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further after that and delivered 200+ pips move to the downside!
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
