Potential swing trade short on EUR/GBP

CityIndex Broker Updated   
FX_IDC:EURGBP   Euro / British Pound
EUR/GBP has just suffered its worst month in ten, thanks to renewed bets of a more-hawkish BOE and soft inflation reports across Europe. Volumes increased during the recent leg lower to show fresh bearish bets being placed and the OBV (on balance volume) has also confirmed the move lower on prices.

Prices are consolidating near the cycle lows on the 1-hour chart within a potential bear-flag pattern, and the flag projects an approximate target near the December low / daily S2 pivot point. A weak inflation report for the Eurozone later today could help send prices directly low.

However, should prices instead recycle higher first (which seems plausible given the magnitude of the bearish move) then bears could look to fade into the daily pivot point ~0.8610 or the volume cluster around 0.825.

Given the strength of the downtrend, we’d view a retracement higher as an opportunity to increase the potential reward to risk ratio.
Trade closed: target reached:
Thanks to softer inflation figures for the eurozone, EUR/GBP continued lower to reach the initial target around the daily S1 pivot. Yet hawkish comments from ECB President Lagarde has seen momentum turn higher.


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