EURGBP: double top reversal on the daily with downside potential
One of the setups I'm looking at for this week is EURGBP on the daily. In the past couple of weeks, it has been flirting with the resistance level created by the previous swing high, around 0.88500. This time around, we can see some selling momentum as the bulls keep having trouble to break the level, which resulted in a nice double top.
In Friday trading, we could see the first break of the moving average in a long time. Additionally that Friday close was very bearish, indicating that further downside is definitely possible after the Monday open. Of course, we can see RSI divergence on the trend reversal and when measuring trend exhaustion with Fibonacci levels, the top reaches the 200% extension level, all adding confluence to this setup.
A bearish Monday open would make me interested in taking a partial position. However, I would like to see the pair going a bit lower and close towards the 0.87300 area, before taking a full position on this setup. That way, some of the local support will have been broken and the way down will be less obstructed by previous trend structures.
This and other setups are described on my website, where you can find my weekly forex outlook.
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Good luck trading,
Felix
In Friday trading, we could see the first break of the moving average in a long time. Additionally that Friday close was very bearish, indicating that further downside is definitely possible after the Monday open. Of course, we can see RSI divergence on the trend reversal and when measuring trend exhaustion with Fibonacci levels, the top reaches the 200% extension level, all adding confluence to this setup.
A bearish Monday open would make me interested in taking a partial position. However, I would like to see the pair going a bit lower and close towards the 0.87300 area, before taking a full position on this setup. That way, some of the local support will have been broken and the way down will be less obstructed by previous trend structures.
This and other setups are described on my website, where you can find my weekly forex outlook.
Find more analysis on smartforexlearning.com and give us a follow:
- on Twitter: twitter.com/smartfxlearning
- on Facebook: www.facebook.com/smartforexlearning
- on Google+: plus.google.com/+Smartforexlearning
Good luck trading,
Felix
Don't let FOMO (fear of missing out) you into taking a position too early. On daily setups like this, there's always plenty of time to take a position once the market confirms our idea. We let the market come to us, not the other way around.