Trading opportunities for currency pair: On Friday, trading on the euro closed up. According to cycles, the rate should restore to around the 0.8600 mark. A CCI level of -100, as well as the intersection of the slow and fast lines on the Stochastic oscillator, should facilitate a strengthening of the euro against the pound.
Polling data for the French presidential candidates remains the main driver for the single currency.
The previous idea relating to EUR/GBP pair was published on the 21st of January 2017. At the time of publication, the EUR/GBP rate stood at 0.8644. Given that traders had closed the weekly price range at 76% from the 9th to the 13th of January, the pair was expected to undergo a minor rebound to around 0.8725 followed by a slide to 0.8366 by 17/02/17. The euro rate fell to 0.8403 by 23/02/17. On the daily chart, the amplitude of movement was 37 pips lower. The tipping points were close to the forecasted dates.
Growing political risks in Europe are acting as a support for the British pound. The upcoming elections in France and Greece's debt problems are having a negative effect on the single currency. Traders are fearful of a Marine Le Pen victory, which would threaten France's EU membership. In this regard, the euro may remain under pressure until the presidential election's second round of voting in May.
EURGBP weekly chart. Source: TradingView
The weekly chart hasn't seen any drastic changes. The rate is staying on the path that was forecasted. The dots on the graph denote the defining points of a head and shoulders model. The rate should return to the 0.8600 region within the next few days and it looks like the trend line will be broken by the 1st of April this year. For a more detailed prognosis, see the daily chart below.
EURGBP daily chart. Source: TradingView
The curve seen in December is similar to February's "double base". I'm referring to the period from the 5th to the 15th of December 2016 and from the 13th to the 22nd of February 2017. On Friday, the EUR/GBP rate closed up. According to the cycle, we should see the rate restore to 0.8600. A CCI level of -100, as well as the intersection of the slow and fast lines on the Stochastic oscillator, should facilitate a strengthening of the euro against the pound.
Given that the exchange rate didn't manage to reach 0.8266 by the 17th of February, a jump to 0.8680 is likely to occur when the rate rises above 0.8520. Polling data for the French presidential candidates remains the primary driver for the single currency.
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