EUR/GBP: our strategy for today

EUR/GBP

Daily chart

EUR/GBP is supported by the diagonal of the ascending channel (in yellow) as well as the 100- and 200-DMAs. DeMarker approaches the oversold territory below 0.3, but still does not point up (signaling an upwards movement). We expect the price to be supported around 0.89 before attempting a test of the reisstance around 0.903.

Considering the 14:00 BoE meeting and the ECB at 14:45, every entry before 14:45 is too risky. EUR / GBP is likely to be extremely volatile during the press conference of Mario Draghi at 15:30. That is why we will be monitoring the market for a decisive signal in either direction.

Currently, the technicals favor a long EUR / GBP position. However, the ECB's and BOE's decisions have the potential to reverse the current trend. For now, the bullish scenario dominates. By 14:45, however, thefundamentals may have changed the technical picture.

Bullish scenario:

A break above 0.903 will end the cup with handle formation for the continuation of the overall trend. This is a strong bullish input signal after a retest at the level of about 0.90. This scenario is supported by the weekly picture:

Weekly chart

The price forms an inverse head and shoulders formation on a weekly chart: it's a strong bullish signal. Even more significant in this case is that the neckline of the formation is 0.905: that is, the inverse head and shoulders neckline coincides (roughly) with 0.903, the completion of the handle of the cup with handle formation. The current price level is further supported by the 10-, 20- and 50-week MAs. DeMarker, however, points down from the overbought zone, indicating a potential downside correction before the trend continues. That is why we think that on a weekly schedule, the technical picture supports an input of around 0.903 after retesting the breakthrough.

H4 chart

For precision at the entrance, we will be following a breakout above the descending channel. The technical picture again supports this scenario. DeMarker shows slight divergence, which is a trend-reversing signal. We will watch for a breakthrough over 50% Fibonacci resistance as a decisive signal for a long position: this is the 0.8989 level.

Entry: 0.9052 (78.6% Fiboanachi support on the 4-hour chart); at these levels the short-term downward trend is reversed by a new peak.

S / L: 0.8955; falling to this level will signal a return to the downwards channel after a false upward movement.

Strategy: Optimally, we will look for entry around 0.9052 after 16:15, the end of the press conference of the ECB and Mario Draghi. A strong bullish or bearish movement before that, however, depending on the fundamentals from the BoE and ECB meetings may support entry before 16:15. To reduce slippage and avoid a whipsaw market, however, we recommend entries after 16:15.

Alternative scenario: If the Bank of England decides to raise interest rates, despite the risks of Brexit, the bullish scenario is rejected. This is possible, given that BoE has already raised interest rates once this year.

Read more:

• Good price to buy British Pound
• Forex Intraday: EUR/USD has reached strong resistance
• Forex: AUD/JPY “Buy” from current levels
• Alexandre Lamfalussy: “We need to admit the euro was a mistake”
• NZD / USD, mixed signals from price action and formations. More likely long after the activation of a flag for increace