Chart of the Week April 26th
The EURGBP has broken out of the lower pennant which we suggested was very likely last week. The next question is where is the pair headed now and can it hit 80 cents?
After three touches on the top and bottom side of the pennant, the pair has broken the key formation on the weekly chart which has held this pair for 1year and 6mos now. With a pattern holding for this long, everyone should be aware of it which increases the risk of technical selling. After last weeks rejection at the 20ema and this weeks break, we have to favor the downside and start looking for major targets.
One of them comes in at the most recent touch on the bottom of pennant which fits nicely at .8600. Should the pair break this level and have a 1hr or 4hr close below, then the next target becomes likely which is the psychological .8500. Beyond this, the next major low clocks in at a tidy .8407 but beyond that, things get interesting.
Should we get a weekly close below .8400, we feel the pair is likely headed towards 80 cents and possibly a return back to the 8mos base low at .7734 which is 940pips away from current price giving us some great downside play.
Chris Capre specializes in using Ichimoku, Pivot Point and Price Action models to trade the markets. He has built and consulted for several institutions in using his Ichimoku Systems and has an Advanced Ichimoku Course for further training. For more information about his services or his company, visit 2ndskiesforex.com.
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