The Forex market has been really quiet over the past few days. Of course there are some instruments where we can find strong and significant movements, but the vast majority of currency pairs are in a short-term sideways trend. In our current environment, one of the best setups can be found on the EURGBP pair. When we analysed this pair two weeks ago, we said this:
“If you want to play it safe and you are not totally convinced by the sell signal, you can wait for a breakout of the light blue horizontal support first. As for a target, we can look towards the green line around 0.863, i.e. the lows from January.”
Those who played it safe, i.e. the more patient traders, got it right. Immediately after those words were written, the price went a bit higher, but eventually broke the blue horizontal support and continued downwards. That breakout from the 19th of February was indeed a proper sell signal. If you missed that drop from Tuesday, EURGBP provided another opportunity on Friday to jump into this trade by forming a shooting star candlestick. That candlestick has a long wick, which was meant to test the blue line as the closest resistance. The shooting star gives us confirmation of the bearish sentiment here and is a direct signal to go short.
The sell signal is ON as long as we stay below the blue line. As for the target, yes, it remains the same as in our previous piece; the lows from January, but I think that we can go even lower.