I wrote yesterday that EUR had rallied strongly against USD and GBP after the stunningly low employment numbers from the US on Friday. I mentioned that as a result EURGBP moved to levels that might not be sustainable. Technical picture was also deteriorating with EURUSD struggling at 1.1355 resistance and EURGBP trading near levels that turned it lower in the beginning of May. Also, the 4h candle was about to create a bearish shooting star candle. Based on these factors I took a view that the price is probably turning lower. EURGBP dropped eventually as GBP rallied on the back of some trading algorithms gone haywire and the pair hit my Target 1 at 0.7776 – 0.7800. According to the method I teach in the webinars gained approximately 4:1 reward to risk was gained.
The pair has now rallied strongly since hitting my first target and is currently reacting lower from an area below a minor resistance level at 0.7834. It is not unusual to see a second leg down after an initial price move lower in volatile market conditions. This move could take the price near to the levels it found support earlier today. The 0.50 Fibonacci retracement level (drawn from the May low to the latest high) is near a 0.7754 support that could prove the be a challenge to the bears if the price moves to these levels. In the daily chart we have bearish pin bar from yesterday’s trading which supports the idea of price moving lower first before it can recover. I would like to meet you in the free webinars that we run on weekly basis. We all should take time to learn more about trading and make sure we know what to do before committing serious money to it. If you would like to become better and more confident trader, feel free to join us! I look forward to meeting you there.
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Chief Market Analyst
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