Got a potential consolidation break out setup, with a little bit of upside bias because of the bullish chart pattern. More gains for EUR/GBP ahead?
On the four hour forex chart of EUR/GBP above, we can see a clear ascending triangle pattern forming, and with the market in a recent uptrend there is a probability we’ll continue to see bull hop in. Now, the stochastic indicator is signaling a potentially short-term oversold market, making a a retest of that rising trendline an attractive opportunity for the bulls.
I’m not going to be quick to put up orders just yet with a heavy week of economic data ahead to potentially shift sentiment quickly. Instead, I’ll wait for a breakout of the rising triangle in either direction, assess the latest data and sentiment, then start dropping in trade orders.
But with Brexit fears still an underlying theme for the British pound, I am fundamentally long biased on EUR/GBP, so my trade of choice is an upside break of the resistance around the .7925 area. This is especially the case if we get dovish remarks from BOE Governor Carney’s press conference on Wednesday or if global manufacturing PMI data sparks risk aversion sentiment among the currencies.
What do you think? Would you jump in a trade now or wait? Let me know which way you’re playing this market in the comments below.