last year was a pretty dull year for trading EURGBP (well by my methods anyway). However it’s a chart I watch closely. As someone who earns in Sterling but who pays in Euro I admit to having a serious interest in the dynamics of this pair.
As mentioned last year was dull. After an early bout of Euro strength we settled into an approx 500 pip range between 0.8300 and 0.8500. Price did perform a classical Double Top Formation which was confirmed with a break below 0.8390. However it didn’t happen with any real gusto or excitement. I certainly didn’t trade it. What I see now on the Weekly chart is that we’ve been sliding south since August of last year in a classical price action move (LLs & LHs).
This has also formed a bearish wedge which UK data in the last few days has helped us test the base of. If this pattern of LLs & LHs within a wedge are to continue then I would expect a retrace back to around the 0.8280 region before another move south towards the support region around 0.8140. After that the next level of support is in the region of 0.7950.
Clearly I’m enjoying the move south and hope that it will continue however I learnt long ago to disconnect what I want from what the markets want. When in doubt – always go with the latter – so we shall see how it all plays out.