Looking to buy valleys in EURGBP (extract from Weekly Market Forecast 6th of October 2013)

EURGBP pushed aggressively to the downside earlier, then formed a base to move up again. I have been bullish on this pair from quite some time now, and I think we should be looking to buy valleys in EURGBP. There is a bullish convergence forming on the 4 hour chart as shown below, which means the pair might move down again to levels such as 0.8430 or 0.8400.

If we have a drop in EURGBP, then we might look to buy the dips. Remember, there is a gap to close at around 0.8530/40 as shown in the daily chart below. So, in order to enter a buy trade we would be looking for a down move and then bullish divergence to form on the 1 hour chart. If the divergence is formed along with a bullish candle pattern, then we will jump into a trade. If the pair does not move lower, then we will analyze later in the week.

Initial target should be around the gap close at around 0.8530/40 and final target could be around 0.8580. Stop should be placed below the last support. Remember, we will not chase strength in this pair, instead will be looking to buy weakness in the short term.

Major events scheduled in the upcoming week
Last week due to the US shutdown, US dollar was on the back foot. There was no NFP release as well due to the shutdown, which may have an impact on the next Fed meeting. It would be interesting to see how things develop into the next week and whether US dollar will be able to recover some of the lost ground against other currencies or not.

Sunday – Australian Construction Index.

Monday – Euro zone GDP and New Zealand NAB Business Confidence.

Tuesday – Swiss employment data, Swiss retail sales and Canadian trade balance data.

Wednesday – UK industrial production data, FOMC meeting minutes, Draghi’s speech and Australian employment data.

Thursday – BOE interest rate decision and US initial jobless claims.

Friday – German Inflation data, Canadian employment data and Michigan Consumer sentiment.

This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, GBPCAD, NZDUSD, AUDUSD, USDCAD, INDICES.
Get it HERE: Vladimir’s Markets Forecast

Enjoy weekend friends!