Shifting a Gear in the Forex Market

Increasing FX Exposure to GBP

We have opened May 2015 with a decent profit over AUDUSD while we wait for a significant price movement in GBPUSD and CADJPY. The UK elections are scheduled for tomorrow (Thursday) while recent polls show the Conservatives and Labour are neck-to-neck with 32%.

Our bullish outlook for GBP remains the same while we are choosing to increase our exposure to the currency ahead of the elections. We are perfectly aware of the risks of such actions but we due to the minimal stop loss order it is a risk we are willing to endure. After studying the charts we are opting for EURGBP.

See some of our more recent trades, EURJPY forex signal.

EURGBP 4hr Chart

Please click on the chart to enlarge:

EURGBP 4hr Chart, 06/05/15

EURGBP 4hr Chart, 06/05/15

The negative divergence in the Relative Strength Index (RSI) suggests a bearish retracement is due for the pair. The nearest daily resistance is seen at 0.7460 where a re-test is a fair possibility. The required stop on the daily chart may exceed +100 pips, which we are not fond of.

We are therefore basing our entry on the 4hr chart with a relatively tight stop in light of the upcoming UK elections. This means we must be extremely accurate on our entry as we the market can easily trigger our protective stop loss order.

Our target for the short trade is 0.7180, based on the 4hr chart. As this is an intraday entry we would not expect to hang onto the trade for a substantial period of time.

EURGBP Trade Alert Details

EURGBP short @ market price (0.7445)
Take profit: 0.7180
Protective stop:
Risk Ratio (RR): 0.7495
Estimated duration: 48 hours

Updates regarding the trade will be posted at the bottom of this page and subscribers will also be notified via email.

07/05/15 UPDATE: EURGBP is trading at 0.7421 at the time of this writing ahead of the US unemployment claims. Although this is a minor profit we close 10% of the trade at market price.

07/05/15 UPDATE II: EURGBP is trading at 0.7405 at the time of this writing.

EURGBP 4hr Chart, 7 May, 2015

Please click on the chart to enlarge:

EURGBP 4hr Chart, 07/05/15

EURGBP 4hr Chart, 07/05/15

We are closing 20% of the short trade at market price and shift the protective stop to the entry.

07/05/15 UPDATE III: EURGBP extended its weakness, trading at 0.7381 at the time of this writing. As we have anticipated,

GBP is strengthening against a basket of currencies until the exit poll will be released at 21:00 GMT. We are closing 10% of the short trade at market price and shift the protective stop to 0.7436.

07/05/15 UPDATE IV: EURGBP is trading at 0.7300 following the UK elections exit polls that showed the Conservatives are in the lead.

EURGBP 4hr Chart

Please click on the chart to enlarge:

Reaction to the UK elections exit poll

EURGBP 4hr Chart, 08/05/15

We are closing EURGBP short trade at market price and finish the trade with +145 pips profit (approx.).

ddmarkets trading signals service