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EUR/GBP May Soon Resume Uptrend

Last updated 2/6/2009 6:23 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

The EUR/GBP has been trending up sharply since the beginning of 2007.  However, the pair has dropped down significantly since the New Year.  The pair has fallen in a nearly perfect ABCD pattern that is close to completion.  As we look back, we see significant lows that help form a potential bullish Gartley pattern.  

We are looking to buy the EUR/GBP at point D (0.8553).  Point D is located at the convergence of the following points:

We will ideally see a shorter term pattern that leads into this trade.  If there is no shorter term pattern that develops, we will at least look for an entry without long bars at the end of the CD leg.  So far, the time symmetry has been very solid.

To recap, we will look to buy the EUR/GBP at 0.8553 with our stop placed at 0.8310.  Our initial profit targets are 0.8871 (38.2% of CD) and 0.9118 (61.8% of CD).  It is very important to use a stop in this trade, because we could see a large drop if this pattern is broken. 

Daily Chart - 0.8553 is at the 61.8% Fibonacci retracement of YZ.	Daily Chart - Bullish Gartley; buy @ 0.8553.

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