Well, after so many false starts for this pair,
could THIS be the right time to go long, at last?
Hello,
I see another thread on EUR/GBP, so I thought to resurrect my own thread, which has a stack of charts and
user comments, to support attention raised on this pair… As you will know, my article forecasts a pick-up from the
decades-long floor of 0.77 - 0.7750, seen tested on three occasions here in 2008, 2012, and 2014:
In the last four months (almost to the day), this pair has been stuck in a range, yo-yo style, of
about three hundred pips (0.7750 to 0.8050)…
The descending channel (not shown on this screenshot but on other ones within this thread) is still valid
and it means that the pair could bounce off its bottom… Alternatively, we have the breakout scenario,
where the increasingly compressed pair, from the 0.98(xx) high of the end of 2008, is running out of room:
the only way out is either to finally break below that 0.77 - 0.7750 floor (which has not been broken since 2008)
or to bounce off it (as part of the channel or not, regardless).
The correlation of EUR/GBP to EUR/USD has been very treacherous, with the EUR/GBP staying around the 0.78 - 0.80
area all throughout the hundreds of pips shed by its cousin EUR/USD… If EUR/GBP were to take its clues entirely
from EUR/USD, then it would have long ago broken that 0.77 - 0.7750 floor…
The problem with this four-month range we mentioned is that it plays partly on Euro weakness for downside moves
and then partly on Pound weakness for the upside ones… The perfect balance of buyers and sellers manifests itself
in this range play, and it is not clear, at the moment, which catalyst will fuel a break of this status quo, in either
direction…
Good luck trading
So, it finally happened!
The EUR/GBP pair broke the 0.77 level and it touched the 0.7650 area…
While the GBP/USD has gone under 1.52, in what is an unbroken seven-candle drop on the monthly chart,
the EUR/GBP has so far only benefitted from it by touching the 0.80 level or slightly higher, but never truly
rising in an inversely proportional way to the Pound’s losses: what this shows is that the Euro theme, and
the European Court’s approval for the ECB’s QE plans, are now utterly dominant for the EUR/GBP pair.
Just this morning, the EUR/USD was under 1.17, and a similar drop was also seen in EUR/GBP… However,
EUR/GBP is still influenced by the Pound and it is a difficult pair to trade, because the current bearish trend
really does look rather squeezed: why? Because the break of the 0.77 technical line is too recent to be significant
unless there is a strong and driven move down… The EUR/USD may continue to drop, but, as we know, not all
Euro pairs will drop with the same momentum, and we must therefore wait to see how EUR/GBP reacts to the
next few days of EUR/USD activity as well as Pound rate forecasts. Another disappointment of BoE rate-hike expectations
would further depreciate the Pound, but this is less likely than the current bid for Euro depreciation in preparation for
the ECB’s QE, so it does put doubts into the mind of any remaining bulls for EUR/GBP.
Hi Pip! Tell me you are millionaire… Euro Swissie! Well I had a client who made 50k in one day, I another guy made 3m. Insane!!!
Sadly despite have a brief conversation about the floor breaking, I didn’t even move. Then it happened and I didn’t even have a 10k trade on. That’s life! My wife gave me a hug and said don’t worry there will be other ops. I said NO! Not in my life time!
Anyway to all you guys who made a fortune. Well done!
Dear Emerald!
I am afraid that, like you, I did not trade the Swiss Franc at all, simply because I knew very little about the relationship
between the two currencies as a pair, and so never went long on the 1.20 floor…thank God!
Now, back to this thread: EUR/GBP…
Attached is my longer-term chart of this pair, showing three pink-shaded circled areas on what is the bottom line of
a descending trend channel going back five years or more: what is interesting is that the channel has a width of about
1,100 pips… As we are approaching the floor again for a major test around the 0.74 level, if this held and pushed back
towards the channel top, it would give us (0.74 + 1,100pips =) 0.85… It may seem incredible to think of EUR/GBP recovering
to such extent when it has such a strong correlation to EUR/USD at present…However, the channel is strong and its floor
is an area to watch: if it holds, it may be something to look at for a bounce…
What is interesting on the monthly chart for EUR/GBP is that in July 2010 and in August 2012, each bullish candle that
bounced off the channel floor was the result of an increase in trading volume from the previous month, from 2.3 to 2.6 billion
units in the first instance, and from 1.8 to 4.0 billion in the second instance… Could February 2015 produce a bullish candle
for EUR/GBP?
What is also interesting, finally, is that the pair had a mirror-relationship (that is, an almost perfect reverse correlation)
to GBP/USD from July 2013 to July 2014, with the latter producing an astonishing rise and the EUR/GBP doing the very
opposite: however, in the last six months (July 2014 - January 2015), the driving theme for EUR/GBP has been the
decline of EUR/USD, and the GBP/USD’s decline has been almost completely disregarded, with the EUR/GBP finally
dropping off in tandem with GBP/USD, rather than going in the opposite direction to it…
Here is the question: if the GBP/USD continued to decline, would the EUR/GBP also continue in parallel with it or
regain its mirror-behaviour towards it, going in the opposite direction? Or, if GBP/USD returned to rate hike
speculation and regained strength, would EUR/GBP also regain strength?
A difficult pair, indeed!
As I type this, I notice that in the last two trading hours (on an hourly chart), Eur/Gbp volume produced two very high bars one after the next, around the 37m mark:
After the gap down due to the Greek news, the following two (high-volumed) bullish bars did not really progress far in spite of the high volume: however, what this shows is that the 0.74 level may be strongly defended…why?
Well, zooming out to a monthly view shows that this pair is sitting right on top of the 200-day simple moving average, which currently is around 0.7364: this means that there may be a lot of capital tied to this level…
Thank you and…happy trading !
Hello traders!.
This pair ignored all previous forecasts that I made, so I put my hand up and say: I was wrong!
I had seen that 0.77 level as the Rubicon for this pair: by crossing it, the pair has opened itself to a drop toward unchartered depths… I will continue to stay out.
Hello traders!.
This pair ignored all previous forecasts that I made, so I put my hand up and say: I was wrong!
I had seen that 0.77 level as the Rubicon for this pair: by crossing it, the pair has opened itself to a drop toward unchartered depths… I will continue to stay out.
The 0.7100 could become a good support for the EURGBP, but if it breaks it again to the downside, the downtrend may resume with a strong momentum.
I got short the first week of Jan at .7803. My stop is just over the 4 week high at .7447. Meanwhile I am also short GBP/USD. Ha. Some nice trends in play.
-Adrian
I see a correction in this pair which is overdue.
If I get more clarification of the correction I will go long but will be nimble and look to add to my position if the trade moves in favour.
I never like picking bottoms and when you think it can’t go any further without a correction often it does.
My new video on this pair:
EUR/GBP forex analysis (fundamental and technical…: EUR\/GBP forex analysis (fundamental and technical outlook)
I thought that I should resurrect/bump this thread, given that someone had commented on EUR/GBP today on another thread…
just had a look at EUR/GBP [i haven’t looked at it for ages as i don’t trade it much], and having done an analysis on it …it’s actually really hard to say where it’s heading. i will say if price can weekly close below 0.70000 then price should fall to atleast 0.66100 …but having said that my analysis is not making it clear whether the pair is heading up or down. given my projection for EUR/USD is up, and considering there is some correlation between eur/gbp and eur/usd, if i had to put money on it i would say eur/gbp is heading up and the pound will weaken against the euro and not reach 0.70000
On the 7th May, the pair broke the 100-day moving average by fifty pips but then came back right down, within the overall bear trend… We are in a similar situation today, about fifty pips above the 100-day moving average… Looking at the three-hundred pip move up in the last few days, the volume bars actually show a fading volume, which suggests we do not have enough strength to stay above the 100-day moving average; also, what matters is monetary policy, and fundamentally speaking the QE from the ECB is not meant to appreciate the Euro… I suspect that the solution (or lack of one) of the Greece problem may bring a relief rally, but fundamentally, the Pound remains much more hawkish, relatively speaking, than the Euro.
Let’s hope bonds have ended their epic collapse. If bonds recover then the Euro should start to weaken again. So you may be right pip.
i think you might be right.
atleast for the short term.
Yes, Emerald, I looked at the Dax yesterday and it has fair tumbled! With its inverse correlation to the Euro, I saw just why the Euro has been appreciating…
Interesting article on Euro-Pound: