Intraday Market Analysis: RBS Negative Rates Impact on EURGBP

EURGBP Intraday Strategy

EURGBP recent spike was triggered by RBS, affirming negative interest will be imposed on deposits, sending GBP lower against a basket of currencies. Unfortunately, EURGBP downtrend may have already been affirmed in the Forex market.

EURGBP 4hr Chart

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EURGBP 4hr Chart 20/08/16

EURGBP 4hr Chart 20/08/16

The bearish 4hr candlestick on 18 August, 2016 has violated the top Head-And-Shoulders (H&S) neckline, affirming a possible short-term weakness. The corrective gains in the currency pair are part of the H&S and do not suggest EURGBP is poised for moderate gains.

Due to the upper shadow of the prior session a re-test of the resistance (in black) may take place but is not guaranteed. If EURGBP gaps higher on Sunday night (21:00 GMT), a 4hr close beneath the resistance is required to establish a short trade in the market, stop layered above 0.8700. If a re-test does not take place it must be anticipated if a trade is taken at market price.

The next key level is 0.8627, which may also be used for breakout strategies. A break below 0.8627 may reaffirm the resumption of the downtrend based on the top H&S. The 55MA (in pink) is offering the latter support, which we expect to give way following the breakout. The initial objective of the weakness following the breakout is seen at 0.8580, which is expected to hold on the first test.

If 0.8580 holds, corrective gains may be seen towards 0.8610, which is expected to hold. Upon a 4hr close after testing 0.8610 a new short signal may be available. A firm break below 0.8580 paves the way towards 0.8520. Although a successful re-test of 0.8580 may provide an intraday long trade we prefer focusing on short positions in EURGBP. If EURGBP posts a 4hr close above the resistance (in black) it mat invalidate the intraday projections for the pair.

The European manufacturing data that is due on Monday is likely to be the trigger in EURGBP, however, we anticipate our intraday strategy to kick into play during the Asian session on Sunday night.

23/08/16 UPDATE: EURGBP resumed its downtrend, breaking below 0.8627 and below the 55MA.

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EURGBP 4hr Chart 23/08/16

EURGBP 4hr Chart 23/08/16

24/08/16 UPDATE: EURGBP has reached its bearish objective.

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EURGBP 4hr Chart 24/08/16

EURGBP 4hr Chart 24/08/16


AS ALL THE SIGNALS IN THIS PAGE ARE CLOSED THE STRATEGIES ARE NOW ACCESSIBLE TO ALL TRADERS



Intraday Market Analysis: RBS Negative Rates Impact on EURGBP

Intraday Market Analysis: RBS Negative Rates Impact on EURGBP

Last Updated on October 2, 2017