EUR/GBP to find major price rejection

EUR/GBP to find major price rejection

By: James Ansher | Where To Trade | On:10-10-2014 12:31
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Key Highlights

  • EURGBP on a major down trend
  • Major multi-month trend line insight
  • 200 Pips to major support line
  • Multi timeframe analysis

 

EURGBP 

Since December of 2009 the EURGBP has been on a down trend; from peak to trough the trend measures over 20,000 pips. The down trend is currently approaching a major multi month trend line of an even larger up trend that from peak to trough measures 40,000 pips. The later uptrend started in march of 2000. Currently the prices are just 200 pips above the major trend line we anticipate to see major rejection of prices as it approaches the major trend line and a similar rejection as it approaches the upper bound of the minor trend.

 

Technical indicators

 

Monthly Chart

From the monthly charts the candlesticks are caught in between two major opposing trends. We anticipate that the larger trend will override the smaller one. 

The 14 and 21 period moving averages have made a bearish cross and they are both trading above the exchange prices. This is a very bearish signal indicating that the prices will slide down lower. We anticipate the downward momentum to continue at the current levels. This confirms that the prices will actually reach the support of the major trend line where we anticipate a major price rejection by the awaiting bulls.

The Stochastic is giving a reading of 11.22 which indicates that we are at extremely oversold conditions. This means that we should be anticipating some retracement to occur. However we should also note that the stochastic has been prima facie in oversold conditions for a year now. On the other hand, the RSI is reading at 37 .28 which is a neutral reading.

Where To Trade - EURGBP Monthly 10-10-2014

 

 

Weekly chart

From the weekly chart, the 14 and 21 period moving averages are trading above the prices. This is a bearish signal indicating that the bearish momentum is strong and likely to continue in the short term. The 21 period moving averages is trading above the 14 period providing further validation for this conclusion.  The 21 period is also acting as significant resistance to the prices.

Where To Trade - EURGBP Weekly 10-10-2014

 

Daily chart

From the daily chart, the 14 and 21 periods have just crossed the candlesticks. This is a bullish warning indicating that the prices may start to make some bullish moves. However they are still maintaining a bearish cross with the 21 period moving average above the 14 period. This is a clear signal that the bulls have not picked up steam yet.  So we cannot enter into any bullish trades based on this signals alone.

The stochastic has just moved out of overbought conditions and is currently giving a neutral reading at 69.39. This is essentially a trend continuation signal that the current trend will continue.

Where To Trade - EURGBP Daily 10-10-2014

 

Wrap up

The EURGBP offers a very unique trading opportunity for short term and medium term trades. The collusion between two major trends will offer a lot of very predictable volatility for the pair.

We anticipate the major trend to override the minor trend in the short term.  We also anticipate that prices will bounce off the upper band of the minor trend and retest the major trend line. Under these conditions a great trading approach is to go long at the major support with a take profit near the upper resistance at the upper bound of the minor trend.

James Ansher

James Ansher

When there is a will there is a trade

A successful Forex trader and expert advisor

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