Published On: Wed, Apr 26th, 2017

Two-way play in EURGBP



The long-term outlook for the cross remains to the downside but we look for a higher correction intraday. This has resulted in another two-way play this week 

Monthly – Over the long term, we are looking for a move back to the reverse trend line support at 0.7975. For the last 5 months, we have seen spikes in both directions highlighting indecision.

Source: Saxo Bank

Weekly – Highlights a possible descending triangle formation. Plenty of scope for a move in either direction. A break of last week’s low is needed for the selloff to continue. 

Source: Saxo Bank

Daily – I think most FX analysts are toting the same formation. A possible bearish Head and Shoulders. The reason I say ‘possible’ is that the base needs to break to confirm the formation.

Source: Saxo Bank

Intraday (four-hours) – The last move lower can be seen in five waves reversing close to the 261.8% extension level of 0.8302 (from 0.8788-0.8603). This would ‘suggest’ that the last move (higher) is merely corrective. We have left a gap open at 0.8370. These windows tend to get closed. Previous area of congestion is seen at 0.8570-0.8600

Source: Saxo Bank

Intraday (60 minutes) – We have broken the triangle formation to the upside. The measured move target is 0.8565. 261.% extension is seen at 0.8576 (from 0.8312-0.8414) 

Source: Saxo Bank

Management and risk description



Entry: buying at 0.8520.



Time horizon: today only


Medium term 
Entry: Selling at 0.8565.
Stop: 0.8610.
Target: looking to close to gap (0.8370). Try to leave some on for an unexpected result in the French elections. 

Time horizon: medium term.

— Edited by Martin O’Rourke

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