EURGBP at major turning point?

[Mercury]

I have been tracking this pair back up for some time now and finally it has arrived at a critical point.  Price touched and bounced away down from the underside of the Weekly chart Fib 23% (drawn from the real low when the Euro came into existence and the 2008 high).  This is also just above the weekly chart Fib 62% (drawn from the same 2008 high and the July 2015 low) and in a zone of strong long term resistance on the weekly chart.

 

My large scale EWT analysis suggest that this is the termination of a wave B with a strong wave C down to come.  On the Daily chart there is strong Neg Mom Div as well as RSI/Stoch over-bought and a parallel tramline set with 5 solid touches (a-e - pink) and a small 1-5 (green) up from the 6 Sept low.

 

On the hourly chart I have a 1-5 (brown) up in the daily chart wave 5, Neg Mom Div and a potential ending diagonal breakout. The recent move up also posted a Pennant at half way (a good sign that we have come to the end of this move up and a Gap that has not yet been closed (they usually are unless they are breakaway or continuation gaps, which this does not look like to me).

 

All in all this represents a strong case for the beginning of a Short campaign that could last some time.  There may be another leg up or a retest of the diagonal before the real drop begins or it could just drop hard for here.  The other 2 members of the Triad are showing potential GBPUSD rally with weakness in EURUSD,which is what you would want to see.  Will be interesting to see how this develops over the coming days.

 



[donaldprice]

I do think you may be on to something on here, if you look at the chart on the weekly you will notice that WB (Purple/pink) we have bounced from a 88.6%fib level. If we have a decent close from here then we could see a good pullback, but not too shore that this will be the end of the bull market, this would be determined if we break the triangle in your 4 hourly chart.

Watch this closely of course. I definitely would be interested in place one  small position (scale in more like) for now and toy with it until be see some more evidence and then build up from their as price action permits.



[jbtrader]

Yesterdays price action looks like a reversal to me.

I will short just below yesterdays low at 87.75 which will confirm a continuation. 

My stop will be at 88.40 TP 85 for now.

 

Cheers,

 

JB.

[Mercury]

That is exactly the trade I have on order  and a good example of how to play these potential ending diagonal break.  The risk we have to watch for is a stop in and reversal but that's what stops are for...

[Mercury]

 sure showed the right way to play this kind of move (i.e. where another leg up cannot be ruled out) and another leg up is what we are getting.  All the conditions remain the same as my previous post though and after a 1-5 rally, perhaps to the top (or near the top) of the parallel tramline set upper line we may see this market top out.  As always a clear confirmed break down would be needed before trading it.  A breakout from the lower tramline might do the trick.  Ideally we would also need to see a reversal in GBPUSD into a rally phase and/or a serious looking drop in EURUSD.

 



 

 

[jbtrader]

Well my trade never triggered and thankfully so.

 

What a move on the Pound today!!!!!!!!

[Mercury]

If you cut off the flash crash (rally in this case) spike EURGBP looks to have turned.  I went Short at the upper tramline on the initial turn and am now seeking additional shorts as I expect this market to continue down for some time to come.  This is a better set market than GBPUSD in my view.

 

Sorry I don't seem to be able to upload charts at the moment.

 

[Mercury]

EURGBP may be about to start a major move down.  This has been coming for some time but initial turning momentum was quashed by the GBP flash crash.  Since then the pair have resumed the downward shape in my view.  If the post flash crash move is seen as a pair of EWT 1-2 retrace moved in a retrace Triangle then a breakout from the triangles (4 hourly and Daily) may offer good short opportunities.  If EURUSD also resumes its downward trajectory (see EURUSD post) and GBP shows some strength then this pair could crater fast in a strong wave 3 down.

 

One to watch, especially as it is not a USD cross given US election jitters.

 



[Mercury]

Timing is everything they say and not long after my post the market took off down and broke through the Daily chart Triangle (see below).  Now with a new lower low this pair looks set to go on a wave 3 run down.  Sell into the rallies is the order of the day and the beauty of this pair is no direct link to the US election.  With GBP on a surge and likely to continue for a bit before a resumption of the long term downward trend and EUR seemingly turning down at the pivotal point the deck is set for a period of EURGBP bearishness (not withstanding some retrace action, which could be quite strong but offers (for me) a Short opportunity rather than a reversal).