By Gabriel Ojimadu, Alpari
Trading opportunities for the currency pair: A W-model has formed on the weekly timeframe. Keep an eye on 0.9083 level. Cycles suggest a slide to 0.8652 by 10/07/17, followed by growth to 0.9081 by 15/08/17.
Background
The previous idea for this currency pair was published on the 15th of May. At the time of publication, the Euro was trading at 0.8482. I was envisaging a breakout of the 2-2 channel, followed by growth to the upper boundary of the 1-1 channel at 0.8590. This target was reached within 3 days.
Current situation
The French elections are now over, so the level of risk on the market has subsided. Emmanuel Macron has been sworn in as the president of France and his party won the parliamentary election over two rounds. In the recently held snap election in the UK, no party was able to win a majority. After the Conservative Party’s failed election campaign, Theresa May is now trying to strike a deal with the Democratic Unionist Party in order to form a working majority in parliament. Brexit talks have formally begun, but they have gotten off to a difficult start. Because of this, the Euro remains on an upwards trend against the British pound.
EURGBP weekly chart. Source: TradingView
Free Reports:
For 9 days, the EURGBP pair has been trading below the resistance at 0.8852 (high point from 10/01/17). A W-model has formed on the weekly timeframe, so traders should keep their sights on 0.9083. It’s unclear, however, how quickly this level will be reached.
The price is trading within two upwards channels; A-A and B-B. The price is currently located at the lower boundary of the A-A channel. I think that the price won’t stay here and will slide to 0.8717. According to cyclical analysis, we have the following scenario: a fall to 0.8652 by 10/07/17, followed by growth to 0.9081 by 15/08/17.
Fast oscillators on the daily and weekly timeframes are pointing downwards. Because of this, I don’t see the resistance at 0.8851 being broken at this stage. It would be better or course if the price stays within the B-B channel. In such a case, the likelihood of reaching 0.9078 will be significantly higher.