FX Trading Ideas

Eurgbp 31/1/17

EUR has been dropping in value over the past couple of weeks and if this trend continues it will create the final leg of the indicator. Currently 4 points have been met on the indicator which chart theory suggests the price should then move back towards the bottom line.
From the current level of 0.86 the indicator would suggest the rate could fall toward point the bottom line on the chart below which sits around the 0.83 level.

Gbpusd 31/1/17

Cable has been dropping in value since Brexit and since the start of the new year and we have seen multiple waves that could be setting up a Wolfe wave pattern. Currently 4 points have been met on the indicator which chart theory suggests the price should then move back towards the bottom line.
From the current level of 1.254 the indicator would suggest the rate could fall toward point the bottom line on the chart below which sits around the 1.199 level.

From the D point of 0.89995, the rate could fall toward the 38.2% retracement level or CD line according to chart theory. Point D is just below a significant round number 0.9 which are often seen as strong resistance line which adds further confirmation around the level.

Since the start of the year, Sterling has seen some strength after the large drop around Brexit. The USD index has dropped during this time, from above 103 to below 100 as uncertainty is creeping in. Since the start of the new year, a Wolfe Wave has appeared which has been discussed in a previous blog entry. After the 5th wave, we have seen a further move higher within the Wolfe Wave which has created the 4th point of a butterfly pattern.
You also have a round number causing a key support level which has been tested at X and B. Traders looking to trade the CD leg would generally want to close the trade before it gets to this level

Currently, you have a strong support area that has been tested multiple times forming a triangle pattern. The right wing of the butterfly pattern is currently forming and you have a couple of strong entry points ti take advantage of.