EUR/GBP Testing Intraday Reversal Forecast

Last updated 2/26/2010 10:35 AM EST (GMT -5) 10 Comments

FX360 Technical Analyst Staff

Technical Analyst, GFT

The EUR/GBP is currently testing converging daily resistance based on a 127.2% ABCD extension pattern at 161.8% BC resistance near .8955 (as a result of a failed bearish butterfly due to long bar warning sign). Additionally, today's Foresight A.I.tm (artificial intelligence) time/trend forecast points to a potential intraday reversal at which point we have 161.8% ABCD extension pattern confirmation. This means a short at current levels represents a solid risk/reward ratio thus a good trade to the short side with stops just above the current intraday high near .8960. A reasonable intraday target would be just above the 61.8% retracement of the 2min CD leg initially, but it depends on where prices are at relative to the time forecast as it has prices dropping until it ends at 2pm EST. Good thing about these kind of trades is that since we’re at a key level of resistance if we're wrong it will  be over in a hurry (new highs above .8960 invalidate the forecast and suggest bullish continuation), but if we're right we have a pretty big risk/reward, so it makes for a good short-term day trade for a Friday.

Potential Strategy: Sell at current levels (.8952) risking .8962 targeting .8937.

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Comments (10)

rstojsic

February 26, 2010 at 10:59 AM ET

well, over in a hurry like a band aid. this points to bullish continuation

Semaj

February 26, 2010 at 11:06 AM ET

Today is dollar weakness. The Gbp really has no gains on the dollar to trade on. If the Gbp had any strength this might of had a chance. Just a thought :)

Semaj

February 26, 2010 at 11:54 AM ET

We might find resistance here @ the daily R2 pivot of .8967 & .8985 is a weekly R3 pivot for the counter trend traders out there. Two dynamic levels converging going into the weekend. Use your favorite indicator & good luck :)

NeoFX

February 26, 2010 at 01:30 PM ET

"Sell at current levels (.8952) risking .8962 targeting .6937.

????

are you sure about the target, Roger :) this would take a year to get there.

can you comment on target again please?
thanks

p.s. congrats on your NZD/USD and AUD/CAD by the way. truly sharp!!
R

schultzz.at

February 26, 2010 at 02:17 PM ET

A year may be a reasonable timeframe. I remember quite well that EUR/GBP was trading in a range between 0.65/0.70 before the global financial crisis part 1. If the euro drops below 0.85 vs. the dollar and sterling holds around 1.20, we would be back at this level.
Tom Schultz.

rstojsic

February 26, 2010 at 01:35 PM ET

this trade has already been stopped out, but the target was .8937...thx for the heads up on the typo.

NeoFX

February 26, 2010 at 02:28 PM ET

besides, Roger:

this is still a valid trade in my book. we'll see. I think we should still sell here. nice crown on 10min chart and beautiful evening star on hourly chart........as well as a large engulfing bearish candle on 2hr and, if that wasn't enough, a HUGE hammer candle on 4hr chart.


this thing's going down !!

Semaj

February 26, 2010 at 02:53 PM ET

On a daily chart .8850 was old support 3X and acted as resistance 2X, all @ the daily 200 ema. Now we have cleared .8850 by 125 pips and have moved back thru the daily 200 ema. A trendline from June 09' has held and the Jan low was a 78.6 fib anchored from June 09'. Seems the bulls are taking control. If we are pulling back it may be short term. Just a thought :)

silver

February 26, 2010 at 03:34 PM ET

NeoFX I am in this trade I bought at rogers stop and am now up 27 pips his target has been reached what would you put target at according to your chart?

NeoFX

February 27, 2010 at 08:39 PM ET

to be frank, I don't know. I just had to get out because last time I stayed over the weekend I was up 65 pips :)
and though I didn't mind at all, that still means that it could've also reopened 65 against me. so lesson learned as far as leaving positions open on the weekend goes.

as far as the short, looks like bull s may have taken control now. I still think it may dip again a bit to maybe .8920 but overall unfortunately this is going still up I think to .8990 and then finally fall.

we'll see :)

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