After doing top down analysis on FX:EURGBP, I have couple of key ideas that I would like to share with you guys. First of all we can see a clear rising channel (purple in color) formed on the 4 hour chart. Do notice the 2 false breakouts that we got in that channel. I only consider any level being broken only when we get a valid retest after the breakout. In our case, only after 2 false breakouts did we get a valid retest of the channel in the form of a bearish pin bar. Currently we have broken the flag pattern and now we only need to wait for the 4 hour candle to close before shorting this pair. The primary target for the flag pattern has been labelled on the chart above. The stops will go above the top portion of the flag pattern (the line which was tested by the bearish pin bar).
Secondly, if the market is able to come all the way back to the bottom of the rising channel, than we could also potentially have another opportunity to add onto our previously short position from the flag pattern. So, if we get a breakout to the downside in the channel, than we can look to short again at the retest of the broken level (marked by red dashed arrows).
After all targets being reached, if you still have any short positions open, than you could probably hold it till we get down to the 0.69862 level, which is a strong MONTHLY support level. If we switch over to the daily chart, we see a clear bearish pin bar formed right at the falling trend line, which was drawn by connecting August 2013 and March 2014 highs. This trend line has proven to be valid after the market was strongly reject from it in November & December months of 2014 as well as recently in October of 2015. See the charts posted after this description for more clarification.
Lastly, we are also seeing strong bearish divergence on the MACD as well, which just adds on to our overall bearish view on this pair.
Please feel free to AGREE or DISAGREE with this idea by leaving a comment below. Hit that thumbs up button (top left corner of this chart) if you like the idea. Thank you everyone for all the SUPPORT that you have given me so far, I truly appreciate it. Good luck everyone :)
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Illustration of Bearish Pin Bar formed at daily trend line:
Illustration of daily trend line importance:
Illustration of valid bearish bat pattern:
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UPDATE #1: Hello Traders, we just got the break and close below the bearish flag pattern. Now we can short this pair and later look to add onto to it, if we get a break and close below the rising channel (purple in color). All the BEST :)
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UPDATE #2: Hello traders, the break and close that we got earlier today in the bearish flag pattern, was a false breakout. I have closed all the short positions for now. Waiting for further confirmation from price action before jumping back in. We are likely to get false breakouts since the market has been consolidating for quite a while due to the holidays. Thus don't need to rush into any particular trade. Take some time off if no strong setups are present, this is what majority of the traders are doing.
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UPDATE #3: Break and close below the rising channel (purple in colour). Hold onto the short positions.
Trade closed manually
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No clear break in flag pattern. Thus all positions are closed on this pair. Looking for future trade setups :)
Well done using that resistance. Posted same idea two days ago, check it out.
moneymaking
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Hey mate, thank you. Great job on your chart. Thank you for sharing :)
ElPatron.Y
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Anytime I hope it helps you.
moneymaking
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Yeah mate, it sure does. Always appreciate the views I get from you :)
ElPatron.Y
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That pinbar has a name btw. It's called shooting star! One of the most reliable candlestick patterns.
moneymaking
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Oh right, thanks for pointing that out. I haven't really studied all the different types of candlestick patterns, just know few basics ones that are easier to spot :)
ElPatron.Y
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The naming is not important, but the rejection wick is :) And it exactly happened at resistance levels.
moneymaking
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Exactly, The wicks formation at key levels is what I take mostly into consideration.