Recommendation: Long Position
Entry Level: Long Position @ 0.8325
Hedge Level: Stop Sell Order @ 0.8200 (Take Profit Level @ 0.8075)
Take Profit Zone: 0.8550 – 0.8600
Stop Loss Level: 0.8200 (We will not use a stop loss order and execute this trade as advised below)
The EURGBP has corrected after breaking down through its previous support level turned resistance as visible in this daily chart (D1). This currency pair is now trading at its horizontal support level which is marked in blue in the above chart. We expect the EURGBP to rally higher and back into its horizontal resistance zone which is marked in red.
MACD indicates that momentum is improving, but it remains in bearish territory. We expect the histogram as well as moving average to approach the centerline during the expected move higher. RSI is trading in oversold territory and a breakout should further fuel the rally.
We recommend a long position at 0.8325 with a potential second entry level at 0.8100. We also recommend a stop sell order at 0.8200 with a take profit target of 0.8100 in order to hedge our initial long position and before adding new long positions to this trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 0.8200. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 0.8550.
Here are the reasons why we call the EURGBP currency pair higher:
- The EURGBP currency pair is currently trading at its horizontal support level
- MACD indicates that momentum is improving and bearish pressures are fading
- RSI is trading in oversold territory and a breakout should intensify the rally
- Profit taking in order to realize trading profits which will start a short-covering rally
- New long positions by institutional swing traders