The EURGBP continues to give us an opportunity to trade a symmetrical triangle pattern created on the daily graph. Our first entry looked to sell support with the March 27thChart Of The Day, trading the interior of the triangle. Price has recently declined to our limit entry confirming support near .8300. As the triangle narrows, we can change trading gears and begin looking for a breakout under these pricing levels.
Below, we can see the development of today’s daily chart on the EURGBP. Price has recently tested support at .8300 while fast approaching the end of our pattern. As price continues to consolidate the likelihood of a breakout increases. The easiest way to prepare for a breakout is to use entry orders. A breakout to new lows should look for a dive under the previous low set on March 19th at .8284. A break above the previous high at .8396 can be used as a catalyst for new buy entries. These levels can also be used for stop order placement with stops over resistance or under support.
My preference is to sell the EURGBP on a break of support under .8275. Stops should be placed over resistance at .8395. Limits should look for pricing targeting 240 pips at .8035 for a clear 1:2 Risk/Reward profile.
Alternative scenarios include price breaking upward out of our triangle, triggering fresh buy orders.
---Written by Walker England, Trading Instructor
To contact Walker, email WEngland@FXCM.com . Follow me on Twitter at @WEnglandFX.
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