Technical Forex Short on EUR/GBP

Starting off the third quarter of 2015 with a simple technical short setup on EUR/GBP. Is it time for sellers to jump in after the bounce?

EUR/GBP 4 Hour Forex Chart

EUR/GBP 4 Hour Forex Chart

Technically, since the weekend gap to .7000 on Greek default uncertainty two weeks ago, EUR/GBP has recovered a couple hundred pips to an area that I can argue may be attractive to sellers.

As we can see in the four hour chart above of EUR/GBP, besides being a previous area of interest, the current trading area is also the Fibonacci retracement area and just under a fresh trendline of lower highs. Finally, the stochastic indicator shows potentially overbought conditions and possibly a reversal. We may already be seeing signs of a reversal as the market is trading lower since retesting the major psychological level of .7200.

With that in mind, and to play the broad Sterling strength vs. a weak euro (and the Greek default & more uncertainty), I’ve decided to take a very small short position with a wide stop of one weekly ATR, and an open target, but my initial adjustment area will be the previous swing low. Here’s what I am doing:

Short half position at market (.7165), max stop at .7325, initial target at .7000

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure I’ve got a pretty open profit target, but I’ll re-assess if my initial target of 0.7000 gets hit. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned!

  • Milan Vangeľ

    Nice to see that there is someone else who is trying to use this opportunity. But there is a “fight” between EUR and GBP at this time because each gained some strenght today.

    • Cyclopip

      Thanks for your thoughts @milanvangel:disqus! The pound seems to be benefiting a lot from the potential for a Greek deal. This is all unprecedented, so it’s a hard call which way is likelier move. Just gotta keep the risk management tight, but if it does continue to go our way, I’ll look to try to increase my max profit safely. 🙂

  • Krišs Ločmelis

    Be careful, because my analysis suggests that downtrend from year 2008 just ended, and you are shorting new trends little correction which will likely end at 0.7090, 0.7080 area. There’s one big support around that area. So be careful.

    • Cyclopip

      Thanks for sharing your analysis @krisslocmelis:disqus! I’ve got my stop set and will probably trail if it continues to go my way. If it really is a new trend, my loss will be very limited, or hopefully I’ll already have a profit locked in by then. 🙂

  • Krišs Ločmelis

    Then good luck!

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  • Arsalan Mukhtar

    What Is The Nexy Idea Of Eru Gbp

  • Arsalan Mukhtar

    I Think EruGbp Overall Down and Target Level Is 0.67370