EURGBP sellers are testing prices below ascending channel support. This is a pattern we first examined on August 28th when buyers were moving to test the channel ceiling at 0.9280.
Since the August 29th bearish rejection candle, the pair has lost more than 300 pips as of today’s session. With prices sliding below support on an intraday basis, today’s close at 5 pm EST will be a key factor in determining the pair’s likely path forward.
A daily close below the 0.9040 handle would have us watching for a retest of the area as new resistance. It would also expose the next key support level at 0.8920. A close below that would pave the way for a move toward the March high at 0.8780.
Alternatively, a close back above 0.9040 before today’s close at 5 pm EST would keep the bullish momentum intact. However, even if buyers manage a session close above 0.9040, justifying a long position would prove difficult due to the velocity of the recent decline.
I’m going to remain on the sideline until today’s final print. Anything below 0.9040 would have me watching for a sell signal for a move toward 0.8920 and perhaps 0.8780.
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8 comments
Hi. Justin, thanks for that analysis. What if the break below 0.9040 at 5pm EST is a fake break and next day price gets back into that channel, how do we determine that? This happens seldomly. Sometimes a strong impulse or high velocity of price elasticity may be violated cause of high impact news thereby changing the direction of the trend. One trick I use most times is to check lower time frames and study the movement of the swings, once it is biased against the expected trend, I would delete the trade before it hits stoploss cause probability of hitting stop loss may be high. The Brexit situation currently battering UK is some concern to me. Technically, we should see eurgbp down if closed below the channel at 5pm EST, all things being equal.
If it closes back inside the channel after closing below it, it’s a false break. As long as the pair closes below channel support and stays below it on a daily closing basis, the bearish bias is intact.
You can drop to a lower time frame, but that won’t do you any good if you’re trying to trade the daily chart. In fact, it will only complicate things.
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Thanks for letting me know. It’s up now.
Waiting patiently for a possible set up to the downside. 🙂
Hi. Justin, thanks for that analysis.
Justin you have killed the market on Eurgbp. I’m wowed! I’m going do everything to join the community soon bro!
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