Tag: EURGBP

This week, the $EURGBP broke above the 0.7500 resistance level for the first in 12 months. Given the context of the break lower back in January last year, the break higher this week holds real implications for price action in 2016. In the face of QE and rate cuts, the euro has rallied over 500 pips. This is a complete break from its fundamentals. Or is it?

Premium trade setups with targets and stops are published in the EUR/GBP Outlook for the Week in Volume 45, this week’s Quid Report.

The European Central Bank (ECB) lowered its deposit rate this month by 10 basis points to -0.3%, moving rates further into negative territory. Additionally, the ECB extended its current quantitative easing (QE) program well into 2017 while maintaining the amount of bonds purchased each month. The ECB wants to support Europe for as long as possible. They need to. While these changes in policy constitutes huge monetary action by the ECB, the market was expecting an increase in QE not just an extension and slight adjustments of the same program. The market also anticipated a larger interest rate cut than 10 basis points. This was less aggressive easing than the market was actually expecting. For this reason, the euro continues to rally tremendously (Volume 41). Despite the strong rally that gripped the $EURGBP in the aftermath of the ECB monetary policy easing, there had been no real follow through in either direction for the past two weeks. Dips were met with buyers while sellers capped rallies. Consolidation below the 0.7250 resistance level was not necessarily bearish price action. Despite breaking above the 0.7250 resistance level, the $EURGBP was unable to close above it until the Friday close last week. Additionally, the Friday close remains above the key 0.7100 level (Volume 22) and is a higher close than the previous close on the weekly chart. As such, the $EURGBP maintains its bullish bias for the new trading week.

The $EURGBP has to move below the 0.7200 support and psychological level in order to change the bullish momentum. Last week, sellers continued to step in at and above the 0.7250 level. However, the lows were also met with its own supply. Buyers have been stepping in at the lows above the 0.7200 level. After the volatile surge higher, two weeks of consolidation does not signal a reversal. In fact, consolidating at the highs actually signals a move higher, depending on how the new week opens (Volume 42). As the new trading week opens, this nascent bullish signal has manifested as the $EURGBP has finally moved higher to break above the 0.7300 resistance level that had capped rallies for the past two weeks. This explosive move higher will likely be met with profit-taking after the long consolidation. Pullbacks off the highs need to find support above the 0.7300, now turned, support level. Given price action during consolidation, it is highly likely that it will.

Premium trade setups with targets and stops are published in the $EURGBP Outlook for the Week in Volume 43, this week’s Quid Report.

The $EURGBP ended last week back above the key 0.7000 support level. After breaking last week’s low, the EUR/GBP printed another failed low at 0.6949. The first failed low at 0.6984 was a result of a euro relief rally. Just when it seemed as though the $EURGBP was moving lower within its Fibonacci move, the BoE released its dovish policy statement and inflation report. The unwinding of interest rate expectations is now the reason for the latest rally in the $EURGBP. As a new fundamental shift in the markets, this rally looks to carry much more credibility than the last. As such, the failed low looks to target new highs above the previous high at 0.7159. The one obstacle for bulls is the 0.7100 resistance level. The rally into the end of the week held below this important level for another weekly close below 0.7100. When there is a close below the 0.7100 level, there is a subsequent drop in prices. When there is a weekly close above the 0.7100 level, the $EURGBP typically rallies after the subsequent hold of support. So last week’s close looks like a bearish signal for the $EURGBP. However, it is more likely price met profit-taking at the key level after a bullish week. It is expected that the $EURGBP continues to rally in the new trading week to break above the 0.7100 resistance level.

The $EURGBP repeated price action last week from the week prior. The failed low led to a rally that held below the 0.7100 resistance level. However, the new trading week is opening very differently from last week’s open. Last week, the $EURGBP immediately slumped lower as the market anticipated a bullish BoE Thursday and a hawkish BoE in the coming week. Now as the market processes new expectations in interest rates and a more dovish BoE, the $EURGBP opens the new week still elevated just below the 0.7100 resistance level. Momentum on the daily chart is back in bullish territory to start the new trading week. The price action at the open this week versus last week leads to a conclusion that the $EURGBP is looking to break to new highs. If the $EURGBP is unable to make a new low below the 0.6949 failed low, then a rally will set in that targets a new high above the 0.7159 high. It is important to note that a new high can still respect the sell zone for a Fibonacci move lower. However, with a second failure to make new lows below the 0.6929 lows, the probability is tilted towards a move higher above the key resistance level at 0.7100.

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This is an excerpt from this week’s issue of QUID REPORT. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.

Each week, I highlight a chart out of the Quid Report.

The euro behaved as expected in this week’s Volume 15. The levels on the daily chart foretold the dramatic story of Greece. The week started off with a deal taking shape that rallied the $EURGBP off the 0.7250 level.  Then Greece played hard ball and the IMF left. Germany said the euro was too strong. $EURGBP peaked and fell to 0.7200. $EURGBP rallied off that support to close the week in that quirky little zone between the arrows. How will euro trade next week?

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This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time calls and adjustments to the weekly report. AVAILABLE NOW.

The $EURGBP completed its Fibonacci move from the highs at 0.7482 with the new low below 0.7128. While it didn’t appear to be the top at the time, the euro became mired in Greek financial drama last week. The smoke-and-mirrors of Greek repayment is once again wearing thin on the markets. The euro had been rallying higher as Greece communicated ability to repay its debts. Then last week, the European Central Bank (ECB) meeting minutes confirmed the ECB’s satisfaction with its quantitative easing (QE) program and its intended effect on financial markets. The euro collapsed as markets were reminded that QE continues in full form out of the ECB.

While the $EURGBP may have completed a Fibonacci move on the daily chart, the Fibonacci move on the weekly chart still has yet to be completed. The 0.7100 support level is a formidable support level. It became the level against which bids stepped into the market to ignite the latest rally to 0.7482. While price last week did break below the 0.7100 support level, the trading week closed above it. With price already below the support level to start the new trading week, there are a slew of former lows to contend with as the $EURGBP looks to complete price action to the major support level at 0.7000.

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This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time updates to the weekly report. AVAILABLE NOW.

The $EURGBP staged a monster breakout last week. We cited last week that the $EURGBP had the potential to rally if Greece received a bailout. No bailout came but the buyers still stepped out to buy the euro. One reason is just simple profit taking. At the end of the month, traders squared positions after the euro’s break of multi-year support levels. Another reason is the approach of summer trading. Trading desks are getting ready for the thinner summer market environment. So taking profits off the table and squaring up positions for summer trading may account for a large part of these EUR strength flows.

The $EURGBP had been previously range bound. It broke that range to the upside and broke above 0.7250 right away. It quickly confirmed the breakout on a 4-hr chart close above 0.7250. The $EURGBP immediately rallied 166 pips higher to 0.7416. Offers lined up at the highs with profit-takers and sellers. The $EURGBP is in a terrific downtrend after all. The Greek crisis makes it hard to buy euros for the long term so taking profits at the 38.2% Fibonacci level seems very prudent. But as news of a nearing bailout deal that will please everybody is starting to develop, the euro finds itself in a relief rally. The timing of the rally with election jitters underscores the upside move potential in the $EURGBP. The volatility that is supposed to occur around a change in Parliament has dissipated since hitting markets 2 weeks ago. Perhaps now, the week of the election, market volatility will return that can send the $EURGBP higher still.

If price breaks above last week’s high, it will go to the 0.7500 psychological level. A break higher targets the 50% Fibonacci level at 0.7568. But if price were to move lower in the new trading week, watch the 1st set of Fibonacci levels on the 4-hour chart. These levels mark a correction of the breakout rally of last week. The 38.2% Fibonacci level at 0.7373 should be a place where late buyers will look to enter the rally. Buyers who held from last week know this is also an opportune time to add to long positions. A move lower still targets the Fibonacci levels on the daily chart. These Fibonacci levels are over the entire rally off the 0.7016 lows.

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This is an excerpt from this week’s issue of Quid Report. Subscribers receive my research on all major GBP pairs at the beginning of the week, including access to @faithmightfx on Twitter for daily, real-time calls and adjustments to the weekly report. AVAILABLE NOW.