BOE Won’t Disappoint
The Euro in general has suffered greatly from the European Central Bank (ECB) actions. However, recent technical developments are all pointing towards a mild correction to the recent bleeding in EUR pairs and crosses.
The technical entries in EURUSD or EURAUD were already given and we cannot initiate a trade at current levels. However, EURGBP, due to Bank of England (BOE) governor comments (Mark Carney) that rates may be hiked earlier than expected is providing us with the required deep for a long entry.
EURGBP Hourly Chart
Click on image to enlarge:
BOE members already expressed their concern with the high exchange rate of GBP against a number of currencies, particularly EUR and USD. Our technical entry is based on the hourly chart to minimize our market exposure. The Relative Strength Index (RSI) is below the 30.0 mark (oversold) with a hint of positive divergence. We are fully aware of the potential for a bearish flag but our outlook is based on the positive divergence and high exchange rate of the Sterling is widely expected to be attended to by the BOE.
The market exposure is reflected in the tight protective stop whilst maintaining a decent Risk Ratio (RR) for the long trade.
EURGBP Trade Details
EURGBP long @ market price.
Take Profit: 0.8238
Protective Stop: 0.7969
Estimated Duration: 7 days
RR: 2.1 (approx.)
16/06/14 UPDATE I: EURGBP is within a close proximity to our protective stop. We have revised our technical strategy for the pair and with an extraordinary decision shift our protective stop loss order to 0.7960. We are Our bullish outlook remains valid despite the recent weakness.
16/06/14 UPDATE II: EURGBP trade was stopped out with a total loss of +34 pips. The loss has been absorbed by our earlier trade in EURGBP.[lastupdated format=”F j, Y \a\t H:i T”]