EUR/GBP Weekly Forex Signal - 15 December 2014

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By: John Ursus

Timeframe: W1

Recommendation: Long Position

Entry Zone: 0.7875 – 0.7950

Take Profit Zone: 0.8350 – 0.8425

Stop Loss Zone: 0.7625 – 0.7700

The EURGBP has reversed over the past twenty-three trading months as forex traders sold off the Euro and bought the British Pound; this combination accelerated the sell-off amid a sharp contraction in economic output out of the Eurozone while the United Kingdom managed to expand at a slower pace. The correction took this currency pair from an intra-day high of 0.8815 to an intra-day low of 0.7766 from where the EURGBP was able to halt the sell-off and stabilize. This currency pair could face a short-covering rally amid oversold conditions.

The sell-off took the EURGBP below its 38.2 Fibonacci Retracement Fan, but the move was stopped by the formation of a double bottom formation. A short-covering rally is expected to take the EURGBP back into its 38.2 Fibonacci Fan from where more upside is possible. Forex traders are advised to spread their entries over a 75 pips range between 0.7875 and 0.7950. The downward potential appears to be rather limited while the upside potential remains very attractive.

EURGBP 121514

Professional trader and technical analyst with over one decade of experience. John believes that being a successful trader means you have to be in the minority and defy what is popular. Trading is an art form and not science and there are more myths about trading than there are successful traders.