EUR/GBP in a Consolidation Range

Doug Rosen

By: Doug Rosen

There is no question about it that price has finally broken out of the price trap it has been confined in. The last couple of days the moves for this pair have been rather extreme. I just recently examined both the EUR/CHF and the GBP/CHF charts and it is very obvious price is in a very tight consolidation range. This usually does take place after periods of high volatility. The EUR/GBP has most definitely broken out of the trap it has been in and the ema crosses have been extreme.

EUR/GBP Daily Chart - November 2, 2011

The lower Bollinger band is wide open and pointing down sharply as is the 5 ema and even the stochastics. Price has an open gap from the 5 ema however, and always I expect that the 5 ema will have to catch up with price to push it down further on its way to the downside. Price does not necessarily have to rise up to touch the 5 ema, it can simply slow down to a range until the 5 ema catches up with price.

EUR/GBP 1 hour chart - November 2, 2011

Moving on to the 4 hour monthly pivot chart price has been riding the 5 ema downhill and has slowed down at the M2 at 0.8573 whilst the stochastics is in the oversold zone. On the hourly weekly pivot chart price has halted around the weekly M0 at 0.8564 and is caught between the M0 and the S2 at 0.8600. Price is currently under the control of the 21 ema and the 5 and 13 ema's are touching each other so there is no real momentum at this time.

EUR/GBP 15 minute chart - November 2, 2011

Finally, on the 15 minute daily pivot chart price is in a Bollinger band tunnel and the ema's are all clumped together so at this time and just hovering over the daily central pivot at 0.8585. At this time there is really nothing really going on with this pair other than consolidation so it is just wait and see what price action will have in store for us. I expect to see consolidation until the ema's on the larger time frames catch up with price then continuation to the downside.

Doug Rosen
Doug Rosen is a Florida-based Forex trader who became a skilled technical trader through 3 years of intense practice and self-teaching. He now coaches a live trading room and analyzes the market on forextradeplans.com.

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