Near-term Trade Setups in EUR/USD and GBP/USD

• Updated levels on trade setup we’ve been tracking in EUR/USD and GBP/USD
• Join Michael for Live Weekly Strategy Webinars on Mondays on DailyFX at 12:30 GMT (8:30ET)
• Check out our 2018 projections in our Free DailyFX GBP/USD Trading Forecasts

New to Forex? Get started with our Beginners Trading Guide !

EUR/USD Daily Price Chart

It’s the moment of truth for the Euro as price once again dips down towards the November slope support line. In my last EUR/USD Technical Outlook we noted that price was approaching the lower bounds of the recent support range highlighted by, “1.1351 backed by the highlighted trendline confluence around 1.1320 – look for a bigger reaction there IF reached (broader bullish invalidation & an area of interest for possible long-entries).”

Price registered a low at 1.1336 before posting a 4-hour outside-reversal bar higher. Look for a break of the weekly opening-range high to get things going with initial topside objectives eyed at 1.1410 backed by more significant resistance at 1.1445/57 – where the 100-day moving average and the yearly open converge on the median-line of the November pitchfork. Bullish invalidation for Euro now raised to 1.1330.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

GBP/USD 120min Price Chart

In last week’s Sterling Price Outlook we highlighted a key resistance zone in GBP/USD at 1.2972 – “This level is defined by the 61.8% retracement of the September decline and converges on near-term uptrend & longer-term downtrend pitchfork resistance. A breach / close above this barrier is needed to validate the breakout and suggest that a more significant low was registered earlier this month.”

Cable broke higher today with the advance already taking out initial targets at 1.3072 – the focus remains weighted to the topside while above 1.2972 with subsequent resistance objectives unchanged at 1.3116 and the 38.2% retracement at 1.3181 (key).

Learn the traits of a successful trader in our free eBook!

GBP/USD Trader Sentiment

• A summary of IG Client Sentiment shows traders are net-short GBP/USD - the ratio stands at -1.19 (45.7% of traders are long) – bullish reading
• The percentage of traders net-long is now its lowest since March 6th
• Long positions are20.3% lower than yesterday and 12.1% lower from last week
• Short positions are 30.9% higher than yesterday and 25.1% higher from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are further net-short than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias from a sentiment standpoint.

Find yourself getting trigger shy or missing opportunities? Learn how to build Confidence in Your Trading

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex