EUR/GBP Searches For Direction After Range Breakout
Littlefish FX | Aug 26, 2015 04:59AM ET
For Wednesday’s edition of DecaPip Daily I would like to focus on EUR/GBP as we search for low risk trades in these highly volatile markets.
Currently the EUR/USD and GBP/USD have had large reversal days, so this pair is an interesting play if these currency pairs do decide to trade in differing directions.Currently the risk event of the week for GBP will be the UK GDP release and we may well see EUR/GBP heavily traded before and after.
At the time of writing the EUR/GBP is searching for direction after a large breakout from its well established trading ranges of 0.6900-0.7100 area.
The chart below depicts the breakout and some crucial levels for traders.
For me the 0.7328 area looks to be important and should provide some resistance and a good indication of selling or buying interest in this pair.
Should the 0.7328 break, we can then look to the 0.7380 level, which is currently a great resistance level for anyone interesting in selling this currency pair before Friday’s UK GDP data.
Typically after a large breakout occurs we see price reverse to reasonably near the breakout in hope to attract traders willing to enter the new found trend. If we work on this assumption then I am happy to look for good areas to sell EUR/GBP if it fails to break the new high it made on Monday.
Currently the 0.7220 support level looks a very valid area and where we will test the appetite of the bulls and whether this is a new trend or just a chance for the EUR/GBP bears to enter new shorts from better levels.
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