Amid USD uncertainty, EUR/GBP setting for a break higher
USD weakness has filtered through markets over previous sessions, and with comments from US trade envoy, Peter Navarro causing extreme volatility with his “its over” statement, swiftly followed by White House rebuttal, we look at the relative strength of the Euro against the British Pound.
As we look at the EUR/GBP Weekly chart, we note that price has been bound within a range (0.8315-0.9300) for as far back as mid 2016. The upturn in the Icarus Oscillator in early Jan 2020 marked a bottoming from the lows of recent years, coinciding with a confirmed presentation of the Icarus Reversals Indicator as price closed above the 0.8642 mark and continued higher amidst the March COVID-induced volatility.
The support and resistance zones on the Weekly chart are shown via the IcarusAutoSupportResistance Lines, highlighted as the light green solid lines, and are currently located at the following values:
- 0.9313
- 0.8696
- 0.8322
Remaining on the Weekly Chart, we note that the Icarus Oscillator has shown a continuation in direction, after a single bar deviation, suggesting continued strength . Previous examples of this particular circumstance being somewhat predictive which readers can gather from alignment of the Oscillator change with corresponding change in direction of price action
Looking at the Daily chart, we identify a range of supporting elements to confirm the longer-term outline provided by the Weekly chart. Continued macro events within Europe, namely a (likely temporary) cessation of ungodly levels of QE and ECB support relative to BOE efforts, outperformance of EUR/GBP is a supporting factor.
In recent days, price-action has produced the appearance of the Icarus Reversals indicator, with several tests of the lower band all failing, suggesting a valid ‘ReversalFailure’ signal. This is also further supported by price reacting to both a well-defined trend-line and IcarusSupportResistance lines.
The Icarus Oscillator also shows a recent change in direction, having spent the last 4 sessions consolidating slightly above the zero-control line and continuing upwards, with two separate closes above the upper IcarusSupportResistance level of 0.9014
Further confluence for the long thesis is the rather well defined cup and handle formation.
The 1HR chart provides a clear entry signal, with price moving higher through the IcarusOscillatorLevels(2), marked at 0.9033, on increased volume compared with previous.
Further, the 1HR chart shows the Icarus Oscillator supporting a move higher, with transition from short bias to long bias again outlined by the appearance of the change in status to green/higher.
Entered Long EUR/GBP on pull-back to 0.9035
- Stop Loss (S/L) will be placed above the Weekly resistance level of 0.9015, which is below both the IcarusOscillator Level, the Trendline on 1HR and the Daily IcarusSupportResistance line. It is also a level below recent lows printed in the last 3 sessions.
- Take Profit (T/P) evaluation level will be set at 0.9080, with price action determining exit..
Risk = 30 pips
T/P = 45 pips
R/R Ratio = 1.5 (flexible), depending on price action at 0.9080 level
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