General Analysis After a substantial decline on Monday the EUR/GBP currency pair got back in the frame of the price channel 0.8700-0.8340 and yesterday's daily candle closed below this level. The movement on Tuesday was about 170 points and was due to the overall growth of the British currency. The price of the British pound has also increased against all major quotations. So far it is difficult to assert unambiguously whether the level 0.8700 will be a significant obstacle for the price or not. But in case of a back-testing of it from the inside of the channel and a rebound from it traders will have good reasons to play on the slide. Comparing the Stochastic indicator chart with the price graph we can see a clear divergence which was formed last Friday. This trading signal on the daily chart and with a rising market is quite a strong signal to sell the Euro and should not be ignored.
The signal lines of the Stochastic indicator have been crossed, which is a clear buy signal. The Next Few Days Considering the overall situation on the market for the Euro and the price's proximity to a significant resistance level at 0.8700, as well as the presence of a divergence on the graph, we have all the signals for the opening of sales for the EUR/GBP. The general trend is still increasing but today the most favorable situation is to play on the rollback of the price. During this week we are likely to see a decrease to at least 0.8575 or even further to 0.8500. We recommend opening sell positions on the EUR/GBP if the price goes below 0.8650 with target points for profit-taking at 0.8575. S/L orders need to be set up at 30-50 points above the entry point. Note: This article is provided as a recommendation for trading and SuperForex is not responsible for the result of transactions based on this analysis. Please be aware that CFD and FX trading on margin carry high levels of risk. Traders should ensure they understand the risks associated with leveraged CFD and FX trading before deciding to trade.
