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EURGBP: Keep an Eye on 0.8925 Next Week

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The EURGBP was one of my top trade ideas for the past week. We first discussed the retest of channel resistance on August 28th. The bearish rejection candle on the 29th signaled that buyers were exhausted and a move lower was likely.

We reviewed the Euro cross again over the weekend when the pair was trading at 0.9115. However, the best indication of an imminent selloff came with Tuesday’s close below channel support.

By 5 pm EST, sellers had secured a 0.9008 close, which was well below our key level at 0.9040. This left us watching for selling opportunities from the 0.9040 area for a move toward 0.8920 and perhaps 0.8780.

Both Wednesday and Thursday encountered selling pressure in the 0.9040 region. The former reached a high of 0.9038 while the latter stretched a few pips higher toward 0.9042.

As you can see from the chart below, buyers didn’t put up much of a fight at 0.8925. Instead, the pair closed well below the area and continued its decline until bulls finally found some relief on Friday at 0.8780.

This week’s aggressive selloff leaves the EURGBP overextended, particularly when we compare today’s price with the 10 and 20 EMAs in the chart below.

With this in mind, a bounce from the 0.8780 area early next week would not be a surprise. In fact, I’ll be keeping an eye on this level for a second opportunity to get short.

A daily close below the 0.8780 handle over the coming weeks would expose the next key support at 0.8600. A close below that would target the unfilled gap from April 21st at 0.8369.

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EURGBP ascending channel breakdown

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8 comments
Femi says

You are just exceptionally intelligent. Ever since I adopted using your style of trading, my profit improved. I have this butterfly feeling on the inside that I’m already a pro! All thanks to you Justin. I’m grateful.

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    Justin Bennett says

    That’s great to hear, Femi. Well done.

    Reply
kularathne says

pl.. send me news detals

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Lai says

Thanks you!

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Thomas says

Hi Justin! Just wanna check if everything is clear: Your advice would be to buy EURGPB on Monday at 87.80, wait for the bounce, close the position at the likely 0,8925 resistance line and then open a new sell position, because this will be going even lower than now? Just asking because me stupid still has a buy position at over 0,90 and I’d be very happy to quit not too painfully and then compensate for the big loss 😉 Thanks a lot

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    Justin Bennett says

    No, I’m not interested in buying. As mentioned above, I’ll be watching for a sell signal around 0.8925. Last week’s decline was too aggressive to consider buying the pair this week. Just my opinion.

    Reply
      Thomas says

      Ok, so no buying because too risky, wait for it to rise till 0,8925 and then be ready for a sell signal. I guess EURGBP will take a long time anyway to go back up as high as 0,91 (even if the long-time trend seems to aim to parity EUR/GBP, because of Brexit uncertainties, etc.) Anyway, I won’t bother you more, thanks Justin for your reply and happy trading!

      Reply
Zweli says

Hi Mr J WOW your trading set up made me a better trader in demo, now thinking of real account because of you. My opinion on EUR/GBP I will wait for that pull back 0.8921 to be tested again shoot the bird then at 0.8665 is my target.THANKS MR J HAPPY TRADING WEEK

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