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Tuesday, January 15, 2013


Euro reverses at support (11th of February 2013)

Pound rally was very short term and Euro resumed its trend today. So, we can assume that we can safely adding on dips in eur/gbp pair. Another way we could day trade that is buying above the current resistance of 0.8570. No data came neither from Europe, nor from Great Britain (well except Euro finance ministers meeting) and Euro rose. It means market is readjusting itself for trend resume. Data from Great Britain tomorrow (Consumer Price Index) can trigger more sell off of the cable. 

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Trading ECB rate decision (7th of February 2013)

One more pair that could have been traded very profitably during ECB rate decision was eur/gbp. To tell the truth I think it is one of the best pairs to trade news. Why? Because it is not very volatile and if this volatility can sometimes hit your stops just to reverse a few minutes later, eur/gbp rarely experiences that and stops stay not touched while market continues moving in the direction you had predicted. So, you could enter a short order below 0.8596 (with a stop of 20 pips) and a take profit at a support level of 0.8555. Nice trade!

Third strong day in the pair (5th of February 2013)

Another slightly surprising day for eur/gbp. Could you expect this? We had a huge move upwards on Friday. Then a reversal came that erased all of Friday’s gains on Monday. Today Euro gained back what it lost yesterday. I better wait for market to calm down. I need to see what happens on Thursday and after the release. It will be clearer regarding fundamental policy of ECB and BOE and technical levels become clearer by that time too. So, I am staying out and not taking any positions in eur/gbp for the time being. 

Profit taking before Thursday (4th of February 2013)

Expect some profit taking in eur/gbp pair before Thursday. The trend remains upwards and if ECB is not going to change anything in their statement we should be willing buy on dips. It is also crucial to see what Bank of England position is. They have seen tremendous depreciation in pound recently and should do something about it. If they ignore the fact pound will continue going down. I do not buy British pound in any of its’ pairs. 

Technical analysys (2nd of February 2013)

Very strong day for the pair! It is pretty unusual for a pair to rise more than 40 pips. Today it rose more than 130 pips. Extraordinary trend for eur/gbp! Use all Europe and US news releases to go long in eur/gbp.  The sentiment for the pound remains extremely bearish. Counter trend moves are short lived and they are opportunities for traders to jump back into trend by adding to their long Euro positions. As of now Euro is the strongest currency and Yen is the weakest. The second weakling in a row is Pound. You may diversify by shorting these two currencies against Euro till trend changes. 

Trend (30th of January 2013)

eur/gbp left behind 0.8500 level and continues marching. I am not going to trade the pair for some time as I do believe the rally is overstretched as I do not want to be caught when market reverses. A reversal will be very sharp and dramatic. So, let it ride. Today’s price action after FED release will show what is going where. Be careful as this optimism in a sinking Europe economy is not justified.  

Nothing new for today (28th of January 2013)

Unfortunately, I do not have anything new to say about eur/gbp today. I see that the rally upwards is overextended, 0.8500 my predicted final target is reached and I expect some reversal pattern to form before going short. I do not want to start catching falling knives. Nobody really knows whether the final top is in place or not. Therefore, I wait for confirmation signals from market itself: bearish candle patterns on daily charts, 123 patterns and a few more. 

Volatility rises (25th of January 2013)

This non volatile pair has been very volatile recently. It even went through 0.8500 level and is above it now. I do not know what other possible resistance targets could be for the pair. I was calling for a reversal in Euro this week and this did not happen. Now I have to do the same for next week. The idea is simple: we have reached very important resistance areas on weekly charts. Weekly charts and levels on those are very important. eur/gbp has just hit 200 sma on a weekly chart. In my opinion it is high time for some consolidation and more profound reversal, possibly to 0.8200 level. 

David Cameron comments (24th of January 2013)

David Cameron’s comments regarding Great Britain leaving EU and a possible referendum on the question pushed pound to new lows. Euro is approaching its ‘final resistance’ of 0.8500. I do not know if it can go any further, but in financial markets it is dangerous to speak about some currency being too overbought or too oversold as markets tend to be in inertia for a long time as trends are in progress. So, let markets run and if you find good levels to enter in the direction of a trend jump in and have a ride. This week, however, might be the last for Euro bulls. 

Collapse (22nd of January 2013)

Seems like Euro bulls got tired as prices collapsed today. Support now stands 0.8375. If that is broken we might see much lower prices very soon. The move upwards is overextended and may finish any time. I still expect Euro to go down this week. It will be reflected in most Euro pairs. Well, maybe all of them. eur/gbp resistance is now at 0.8405. If that is taken out the second one is the highest high of 0.8440. I expect 0.8260 to be reached soon. 

Bearish candle (21st of January 2013)

Today we have a small bearish candle on a daily chart of eur/gbp. As the day is not over yet we should not make too hasty conclusions about that. However, I think we are very close to a long term top in the pair. It still has potential to reach 0.8500 level as you can see from the weekly chart below. I am standing aside and have no intentions to trade the pair for the time being. Need more daily candles to form before the technical picture becomes clearer. 

Narrow range (18th of January 2013)

No significant changes in eur/gbp today. The pair has been in a very narrow range today0.8355-0.8387. That is quite usual for the security as its daily ranges are relatively small in comparison to eur/usd or eur/jpy. One should not forget that the value of pip is much bigger in the pair too. I bet that we are near long term high in eur/gbp and a reversal can happen any time. Following its’ character of moving in waves the pair has yet to see a leg down. If big boys start taking profits now, the move down can start on Monday. 

Rally continues (17th of January 2013)

eur/gbp continued its rally upwards without stopping today. What does it tell us? By looking at daily chart I see that this move (that has been in waves) is the strongest from all waves. This also tells me that a significant reversal may come any time. The last thrust in trends is usually the strongest that is all the time followed by an opposite move of a similar strength. It tells us that the stronger eur/gbp rallies, the stronger it will fall in due time, which may be sooner rather than later. 

No reversal yet (16th of January 2013)

eur/gbp pair failed to reverse today. It reached yesterday’s lows and continued its’ uptrend. It is hovering near its top at 0.8300-20. The pair will probably stay between this high and yesterday lows for a few days before moving further up or down. So, selling at resistance and buying at support could be a smart trading strategy for the time being. ECB publishes its monthly report. This could influence further moves in the pair.

Long move upwards maybe over(15th of January 2013)

eur/gbp as most Euro pairs have been in a long uptrend. However, if you look closely how it has been advancing you will see that its going up has been in waves. Every peak has been followed by a sharp correction. There has been 5 wives up and 4 down since the end of July. The fifth top has probably been reached yesterday (on the 14th of January). If the scenario continues this peak should be followed by a collapse (profit taking and extra short positions in eur/gbp pair). Today saw an engulfing candle (bearish) that ended up lower than yesterday’s low. 
By looking at the chart below you will notice that the collapses have been somewhat sharper than rises. If the collapse starts tomorrow I believe support can come around 0.8160 level. A breakout trade by selling below today’s lows is a possibility. Resistance is quite close at 0.8295.