News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
  • S&P 500 contending with its proverbial ‘line in the sand’ as bulls and bears battle for directional control. How we close/trade around the 50-day moving average could serve as a noteworthy bellwether for risk trends headed into next week. I remain cautious below ~4,480. $SPX $ES https://t.co/qogkjs1Sx2
  • USD/JPY trades to a fresh monthly (110.57) amid the pickup in longer-dated US Treasury yields, and the exchange rate may stage a larger advance over the coming days. Get your market update from @DavidJSong here:https://t.co/dlNXOrJnM9 https://t.co/LCQd26W1zF
  • US yields continue to climb, with the 10-year Treasury yield trading above 1.45% $ZN $ZB https://t.co/N4EDfwD3nZ
  • $USDJPY bull thesis appears quite constructive. Technicals show topside breakout above trend resistance following a period of consolidation. Bond yields providing the fundamental catalyst. Eyes on Aug/YTD highs. A broad-based deterioration in market sentiment poses downside risk. https://t.co/AazskXGjHq
A EUR/GBP Short That Requires Patience and Precision

A EUR/GBP Short That Requires Patience and Precision

Kaye Lee, Head Forex Trading Instructor

Talking Points:

  • Pennant-Like Weekly Pattern in EUR/GBP
  • Key "Decision Point" on Lower Time Frames
  • 3 Technical Themes Unfolding at Once

The weekly chart of EURGBP now seems slightly confused. What was originally a bullish formation—a pennant after a move up—is now looking somewhat suspicious. This pennant-type pattern should have broken upwards to continue the move, but it has been edging ever lower in recent weeks instead.

Although the overall pattern is still admittedly bullish, there’s reason to view this with caution. For the moment, the best move would be trade EURGBP as if it is in consolidation, or in conjunction with the lower-time-frame trend, which is down.

Guest Commentary: Weekly Pennant-Like Formation in EUR/GBP

A_EURGBP_Short_That_Requires_Patience_and_Precision_body_GuestCommentary_KayeLee_January24A_1.png, A EUR/GBP Short That Requires Patience and Precision

The daily chart below shows price having risen to the first decision point, i.e. the test of the declining line of resistance. Regardless of whether price breaks down or moves up from this level, there are about 80 pips of potential movement. However, given the clear downward trend in this pair, the short would be most preferable.

Guest Commentary: “Decision Point” on EUR/GBP Daily Chart

A_EURGBP_Short_That_Requires_Patience_and_Precision_body_GuestCommentary_KayeLee_January24A_2.png, A EUR/GBP Short That Requires Patience and Precision

Given how limited the first targets are, a lower-time-frame entry is preferred in order to offset the relatively smaller potential with greater precision.

The four-hour chart below is interesting because of a number of coinciding levels:

  1. A previous horizontal resistance and support-turned-resistance immediately above;
  2. A declining line of resistance;
  3. An inverse head-and-shoulders breakout, the standard target for which has been illustrated on the chart, and also falls within the key zone of resistance.

Guest Commentary: 3 Technical Factors Impacting EUR/GBP

A_EURGBP_Short_That_Requires_Patience_and_Precision_body_GuestCommentary_KayeLee_January24A_3.png, A EUR/GBP Short That Requires Patience and Precision

Thus, the resistance area shown in blue is a logical place to engage with a potential downward move in price. The zone indicated is 0.8296-0.8331, or 35 pips deep. Compared to the potential 80 pips between here and the first level of major support, this is reasonable risk. However, the hourly chart may provide a more suitable trade trigger.

Guest Commentary: The Ideal Time Frame for Trading EUR/GBP

A_EURGBP_Short_That_Requires_Patience_and_Precision_body_GuestCommentary_KayeLee_January24A_4.png, A EUR/GBP Short That Requires Patience and Precision

Readers used to the typical entry triggers will wonder if now is the time to short EURGBP, as there is already a bearish reversal divergence in price with the (8,3,3) stochastic (not shown). Normally, that would be so, but the momentum move up makes this a more dangerous proposition, and thus, it would be better to wait for the next divergence before taking this trade.

Other common entry triggers like pin bars and/or bearish engulfing patterns would still be valid, and it would not be unreasonable to take two or three tries to get in on this trade. At the time of writing, a proper trigger had not yet developed, but this remains a distinct possibility.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES