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EURGBP Carves Fresh Opportunity for Next Week

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On February 12 I pointed out a wedge pattern on the EURGBP that could produce a breakout opportunity. That break came on March 1 and former wedge resistance was tested as new support between the 12th and 13th.

However, the level gave way on Wednesday and was once again serving as resistance by Thursday’s session.

For those wondering why this wasn’t a buy, there are two reasons that come to mind. The first is that there was no buy signal. Although Monday and Tuesday held above the level, neither formed a bullish pin bar or even a rejection candle.

The second point is that, as I mentioned on February 12, the velocity of the selloff last September raised some doubts about a potential bullish scenario here.

So despite the descending wedge (usually a bullish sign), I wasn’t willing to commit capital, at least not without some form of bullish price action.

With the EURGBP now back inside this wedge pattern, it may be time to begin looking for short entries. In my opinion, Thursday’s retest of wedge resistance at 0.8860 was a valid area to short the Euro cross.

But in case you missed it, the pair is retesting another level that could produce an opportunity next week.

The short-term trend line that extends from the January 25 low has come under pressure in the past 24 hours. In fact, it has already broken down on the 4-hour chart.

If sellers can maintain these levels and close the pair below 0.8825, it would signal a short opportunity for next week. The 0.8825/30 area would become resistance with the lower portion of this wedge serving as the target somewhere near 0.8670/80.

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EURGBP wedge on the daily chart

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8 comments
Silindinkosi says

Thanks a lot Justin, I also waited patiently for the buy signal which never came. Had decided to wait and see how the pair is going to react to the trendline support, thanks for the trade idea for next week.

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Patrick Motloung says

Yoh thanks so much for these signals,they are spot on.I am new here,by the way my friend sent me your link.Looking forward to receiving more forex knowledge from you guys.

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    Brendan Devine says

    Hi Patrick. Where are you from? South Africa by any chance?

    Reply
Milad Lj says

wooow Justin You are an observer

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Bogatsu says

Thanks for the analysis, Justin. Already short from last week’s bearish pin / tailed bars with TP at the bottom of the range.

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    Bogatsu says

    Hit TP (5R) in yesterday’s session and seriously thinking about going long after a pin bar was painted at support. Unfortunately I don’t use chart patterns and this range from last year has been very profitable

    Reply
Lazlo says

Nice… Looks good.

Didn’t even see those two trend lines as possible support and resistance.

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sam says

You are too much! Thanks.

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