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Forex: Ideas You Can Trade - EURGBP Hits Upper Line of Down Channel

 

EURGBP: Upper resistance line of bearish channel reached again as recovery pushes higher

The daily candle chart below shows the price history of the Euro currency (EUR) versus the Great British pound (GBP), known as EURGBP. Today this pair is trading near .7349 around time of publication - and near session highs. 

Last time EURGBP was reviewed in Ideas You Can Trade in early May, a similar technical event had occurred when the pair hit the upper line of the same bearish channel it is still trading within - and since then it returned to the lower support line of that channel before returning again to touch the upper resistance line of it today. In the previous post, this behavior was described as an upside correction in a downtrend.  

While a false-breakout could follow - as had did in the last above-mentioned event- traders may look to enter for a brief breakout higher, whereas bears may look to sell if the upper line cannot be overcome. Either way, volatility looks to be returning as the EUR-related pairs got a boost today following positive comments from the ECB, and ahead of EU-related events this week including regarding Greece on Friday. An additional zoomed-out version of the same below shows the longer term trend lines affecting the pair.

Below are examples of how to trade a bullish continuation or a bearish reversal:

1. BULLISH BUY ENTRY ORDER:  Create a “Buy Entry Stop” @ .7364 with a Limit to take profit @ .7477 and a stop-loss @ .7299  Risk/Reward Summary: Limit risk = 113 pips profit / (-65) Stop-loss risk = Gain to Loss ratio = 1.73

2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .7249 with a Limit to take profit @ .7205 and a stop-loss @ .7283 Risk/Reward Summary:  Limit risk = 44 pips profit / (-34) Stop-loss risk = Gain to Loss Ratio =  1.29

Medium Term Daily Candle Chart:

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Medium Term Daily Candle Chart:

EURGBPDaily June 3 2015 note zoomed out

Forex Trading Demo
 


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