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EURGBP Selling Opportunity With Plenty of Room to Run

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Just last week the EURGBP was surging above the 0.8980 resistance level. Thursday’s session even closed above it. Then came Friday’s session which nearly engulfed all 80 pips of gains from the previous session.

As it stands, the close above 0.8980—a level that had capped several advances since October 6—looks more like a false break than anything else.

When this happens, we can begin to watch for favorable selling opportunities. After all, a pin bar or rejection candle is nothing more than a false break on a lower time frame.

Look no further than the weekly chart below.

EURGBP weekly bearish rejection candles

But instead of trying to trade a weekly candle, there might be a better way to approach the EURGBP.

A look at the 4-hour chart shows an ascending channel. The pattern extends from the September low at 0.8746 and is easily recognizable as consolidation.

That’s the key here. The selloff that began in late August looks impulsive to me. And as we’d expect, an impulsive move is followed by a correction (also referred to as consolidation).

If we take it one step further and label the last four weeks as a bear flag, we get a measured objective of 0.8470. However, do keep in mind that bear flags perform the best during downtrends. The EURGBP clearly doesn’t fit that mold.

Still, the bullish momentum seems to be waning here. I mentioned that back in August when the pair was testing channel resistance near 0.9280 and again when sellers cleared channel support near 0.9030. Nothing has occurred to convince me otherwise.

There is also a massive trend line that extends from the November 2015 low. See this post for a detailed view of that level.

In summary, I like the idea of selling the EURGBP on a close below channel support. That level comes in at 0.8896 at the time of this writing. Key support below that includes 0.8830 (2015 trend line), 0.8744 and 0.8600 with an objective of 0.8470.

And judging by recent price action, I would say a breakdown is imminent. But as always, I’ll let time be the judge.

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EURGBP 4-hour ascending channel

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19 comments
MAURICIO says

GRACIAS POR AYUDARME A COMPRENDER EL MARAVILLOSO TRABAJO DE LA BOLSA
CUANDO SACAS OTRA VEZ LA OFERTA PARA ENTRAR A TU CUMUNIDAD.GRACIAS

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andrea says

Hi Justin. I have to say that your lessons are just precious. False break-outs often occur in trending channels. Even in higher time frames the price sometimes does not respect accurately the trend line.The price just goes through the trend line and then reverse in the direction of the channel. It looks a kind of joke sometimes, honestly a sadistic one. What is the best advise you can provide to avoid fails caused by false break-out in trending channels and why this happens so many times? thank you in advance

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Michele says

Very good

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Muhammed Abdullahi says

you information is very helpful

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    Justin Bennett says

    Pleased to hear that, Muhammed. Cheers.

    Reply
MANDLA says

THANKS JUSTIN

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    Justin Bennett says

    You’re welcome.

    Reply
Bongani says

witch brokers do you recommend. i wanna open second account on a different broker?

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    Justin Bennett says

    Please send me an email.

    Reply
SNM says

How can I join with your course for life time membership??

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Melchizedek says

A SHORT shall not be viable until price touches 96275 on the EURGBP. HAPPY TRADING!

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Francisco Vega says

Dear Justin, I pay to join your club, enter the registration email incorrectly, I sent you two emails and I do not have a solution. I already paid, please help me

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    Justin Bennett says

    Hi Francisco, I’ll take a look. I’m way behind on emails but plan on catching up today. Cheers.

    Reply
    Snm says

    How much pay for join club..?

    Reply
      Justin Bennett says

      I think I answered your comment above.

      Reply
Sagitario says

All guru’s predictions are only right less than 50 % of the time… 🙂

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Imran says

EURGBP H4 Channel support breaking now..If H4 close below channel support I will wait for retest…?

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