EUR/GBP gets thrown onto the watchlist this week as the pair has formed a solid trend in the past week, and on the likelihood that we have more catalysts ahead.
Will the upcoming European PMI data and UK retail sales data keep the rally going?
EUR/GBP Ascending Triangle Break?As mentioned above, EUR/GBP has been on a tear higher, surprisingly on euro strength this week after news of a Franco-German Recovery Plan hit the headlines on Monday.
The plan sparked needed confidence for euro bulls on the idea that the two of the largest economies in the European Union are willing to do what it takes to prevent an economic disaster to the fragile system. But will the trend continue?
Well, we’ve got the latest preliminary business sentiment data coming soon from both the U.K. and Euro area during the Thursday London trading session, which are likely to show slightly improving (but really bad) numbers.
This could spark some volatility for EUR/GBP, but it might not be notable unless we get a divergence in performance between the two economies (i.e., better-than-expected European data vs. weaker-than-expected U.K. data, or vice versa).
If that scenario doesn’t play out, then we’ve got the latest U.K retail sales data coming during the Friday trading session to potentially spark a directional move in EUR/GBP.
If volatility picks up, and the data/market reaction supports a long position, then I will hop in the current uptrend.
If the opposite scenario plays out where U.K. retail sales surprise positive and we see a downside break of the rising ‘lows’ then I’ll start building a short position from there.
So, no trade orders for now as I wait to see how the data plays out in this market, but if I take action, I’ll be sure to post an update.
Stay tuned for that and as always, 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 simply follow what I do.
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